How to obtain a personal loan after filing for bankruptcy

Blame it on the unstable job market and a poor economy. Blame it on the high cost of living and easy credit. No matter what or who you blame it on, it’s not too difficult to find yourself hopelessly in debt and joining some million other Americans who have to declare personal bankruptcy every year.

Many people who undergo the bankruptcy process are under the mistaken impression that their financial security is now over for good. In fact, the exact opposite is true. Bankruptcy is actually the first step in reestablishing a new financial identity. It is possible to rebuild your credit in the aftermath of bankruptcy. You just need to gain a basic understanding of some simple strategies for economic recovery.

Below are some tips to consider as you enter the post-bankruptcy loan application process.


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  • understand the specifics of bankruptcy
  • be wary of subprime lenders
  • consult with an attorney
  • take immediate steps to rebuild credit
  • work with other banks/institutions of finance if your bank declines

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  • immediately get a new credit card
  • hide from your credit report
  • despair at falling credit scores
  • be afraid of high interest/secured loans
  • borrow too big

[publishpress_authors_data]'s recommendation to ExpertBeacon readers: Do

Do understand the specifics of bankruptcy

Before looking into getting a loan after filing for bankruptcy, it is imperative that you develop a basic understanding of what bankruptcy means for your finances. Depending on whether you file for Chapter 7 or Chapter 13 bankruptcy, the bankruptcy will remain on your credit report for a different amount of time. Additionally, you need to understand the process in which you, the debtor, makes payments to a trustee. Understanding what bankruptcy means for your finances and what it demands in terms of fiscal responsibility, as opposed to blindly taking advice, will motivate you to better manage your money and determine responsible times to get loans.

Do be wary of subprime lenders

Being proactive about getting a loan after going bankrupt means anticipating and accepting high interest rates and terms which might not otherwise be favorable; however, this does not necessarily mean rushing into the first offer you see, although it may be tempting. Loans coming from subprime lenders generally have very high interest rates and weak collateral, and thus are associated with a higher risk. When looking for a loan after declaring bankruptcy, you should be searching for the loan with the least negative terms attached to it.

Do consult with an attorney

Speaking with a professional is critical when pursuing a loan in bankruptcy. However savvy you may believe yourself to be, someone who specializes in the field can help you navigate the rules and pitfalls of post-bankruptcy financial recovery. If you filed for Chapter 13 bankruptcy and have not paid off your previous creditors, for example, you might not know that you aren’t supposed to pursue a new line of credit – a professional will make you aware of this.

Do take immediate steps to rebuild credit

After you have filed for bankruptcy, you should waste no time in taking steps to rebuild your credit and set yourself up to receive loans with better terms further down the road. There are a number of proactive steps that you can take to insure that loans you take out in the future will have increasingly favorable terms. Speaking with an attorney, as previously mentioned, is simply too valuable an opportunity to pass up. Go through your past credit reports, and monitor your credit score as you continue to make on-time payments on small, higher-interest loans. Resist the urge to take out too much money at a time. You’ll thank yourself in the long run.

Do work with other banks/institutions of finance if your bank declines

If your bank declines you a loan, don’t give up hope. There are lenders, a list of whom you can find easily on the internet, who will provide loans to those who have gone bankrupt and have poor credit. Alternatively, applying for a loan at a credit union may give you a greater chance of success than you might have at your bank.

[publishpress_authors_data]'s professional advice to ExpertBeacon readers: Don't

Do not immediately get a new credit card

After you’ve filed for bankruptcy, your priority should be to pay off existing debt. Before you begin incurring additional payments, it is imperative to get on top of those which are past due. In addition, there are various rules that may prevent you from getting a new card even if you want to – if you disobey these rules without realizing they exist, you risk creating a further, severe setback to your return to financial stability. Simply put, the risks of getting a new credit card before paying off your old debt are too significant to justify the spending power.

Do not hide from your credit report

Especially in the immediate future following your declaration of bankruptcy, your credit report is probably something you wish to avoid at all costs – don’t. Although your scores will decrease significantly during the process of filing for bankruptcy, you can build them back up by keeping up with current loan payments and further monitoring your score.

Do not despair at falling credit scores

Similarly to hiding from your credit report, it will be tempting to lose hope when you see your credit scores fall in the aftermath of bankruptcy. Know that the best way to improve these scores is not to take out no loans at all, but to make on-time payments on smaller loans over a long period of time.

Do not be afraid of high interest/secured loans

Although you shouldn’t spring for the first loan offer sent your way, you should ultimately be prepared to accept a loan that comes with high interest. However, making your payments on time for approximately half a year will likely open the opportunity for lower rates. Making the best of your situation in the unfavorable short-term will allow you to receive better loans as quickly as possible.

Do not borrow too big

When taking out a loan after filing for bankruptcy, assurance that you can pay it back on time should be your top priority. It may be tempting to take advantage of a loan opportunity to take out a large amount, but the potential for missing a payment and further damaging your credit is simply not worth the risk. Instead, take out small loans and make payments on time – it will minimize stress in the long run and provide a foundation for improving your credit.


Although it is sobering to realize that in this economy, even responsible persons can fall into bankruptcy, it’s important to realize that everyone has the opportunity to recover, rebuild credit, and even have a loan application approved. Going bankrupt can be frightening, but maintaining your composure and accepting bankruptcy as a necessary first step toward a stable financial future is key. Understand the terms of your bankruptcy and the significance of your credit score. Anticipate high interest loans, but don’t rush into a deal without consulting a professional. Be proactive about rebuilding your credit. Understanding and implementing these strategies will set you on the road to long-term recovery.

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