Best Personal Loans for Bankruptcy

Declaring bankruptcy is a challenging decision. While bankruptcy can help you consolidate debt or negotiate new terms with creditors, it comes with significant downsides. Bankruptcy filings stay on your credit report for up to 10 years, and poor credit can hinder your ability to get a job, insurance and even a home.

If you have a bankruptcy filing on your credit report, a personal loan can be helpful. Follow Benzinga’s guide to find the best personal loans for bankruptcy.

Quick Look: The Best Personal Loans for Bankruptcy

• Best for Comparing Lenders: LendingClub
• Best for No Credit Score: NetCredit
• Best for Home Improvement Loans: Upgrade
• Best for Comparing Lenders: Credible
• Best for Consolidating Debt:Upstart

Best Personal Loans for Bankruptcy

Benzinga has put together the best personal loans for bankruptcy to give you an idea of all the platforms that can help you.

1. Best for Comparing Lenders: LendingClub

LendingClub is a unique lending platform that allows you to check your eligibility without impacting your credit, complete the process online and get funded in around 24 hours. You will see a range of loan offers that will help you choose the best program for the situation, and you can proceed with the loan as needed.

LendingClub also makes it clear that you may want to apply with a co-signer to improve your chances of being approved. With this type of customer support and information, it’s much easier to make the most of your finances after bankruptcy, especially because it can be more difficult than ever to get loans from traditional banks.

2. Best for No Credit Score: NetCredit

NetCredit is a good place to turn when you have no credit or, perhaps, you’ve experienced some struggles like bankruptcy. You can get approved in funded in just a few days, and there are no prepayment fees.

You should make sure NetCredit is offered in your state. It’s not available in Colorado, Connecticut, Iowa, Maine, Maryland, Nevada, New Hampshire, New York, North Carolina, Pennsylvania, Vermont, West Virginia and Washington, D.C.

You can check your chances for preapproval with a soft credit pull, but interest rates could be high depending on your credit score. You may want to try working with a co-signer.

Consider NetCredit when you want to get going in the right direction after bankruptcy and you’re trying to build your credit, access some cash and regain some semblance of financial independence.

3. Best for Home Improvement Loans: Upgrade

Upgrade is a great place for those who have experienced financial troubles to get fast approval as it markets your loan to its many partners. You can choose from a wide range of terms and values, but you will notice that the loans you’re offered could be quite diverse depending on how much the lender wants to charge.

Even though Upgrade doesn’t lend to your business directly, it ensures that you have the best experience and find the funding you’ve been looking for. This is a good place to market your loan to as many lenders as possible, especially when seeking bankruptcy loans.

Because you’re trying to restart your finances, you can use the funds you borrow for any purpose, and you can work out repayment, refinancing and other issues with your lender. If you need additional support, you can always reach out to Upgrade for help.

4. Best for Comparing Lenders: Credible

Credible is another loan aggregator that brings together all the best deals so you can choose the best loan for your financial situation.

Remember, when you work with a company like Credible, you need to make sure you understand how much the lender you choose can charge in your state. This is especially important when you have just experienced bankruptcy and you need to access some cash. 

You can reach back out to Credible for help, but you will ultimately pay the lender and deal with their terms. If you ever want to refinance a loan, you can come back to Credible to find another lending option — which could be an advantage as your credit improves.

5. Best for Consolidating Debt: Upstart

Upstart is a lender that makes customer support easy by offering a page on its website on loan information and customer service. The lender allows you to access cash with no minimum credit score, which is perfect for those who have experienced bankruptcy.

You can borrow up to $50,000, but remember that your borrowing power changes based on your credit score, the recency of your bankruptcy and other issues that are addressed on the application.

Types of Personal Loans for Bankruptcy

The bankruptcy process begins when you file for bankruptcy and ends when your debt is discharged or paid off. Even after all your debts have been paid off, bankruptcy filings can stay on your credit report for years. 

A Chapter 7 bankruptcy entails selling your assets to pay off debt and will usually not involve a payment plan. This kind of bankruptcy is typically resolved in a few months but will stay on your credit report for at least seven years. 

Chapter 13 bankruptcy usually involves a payment plan. Chapter 13 bankruptcy can stay on your credit report for up to 10 years or longer in certain instances. 

It’s rare for anyone to be able to take out a personal loan while their bankruptcy case is ongoing and debts have not been discharged. The reason for this is intuitive. You shouldn’t be able to take on new debt if you still owe money. 

There may be some exceptions to the rule. In certain states, you may be able to take out a personal loan while your case is ongoing with special approval from a judge. It’s a good idea to consult with a bankruptcy attorney about your options. 

Once your debts have been discharged and your bankruptcy case is closed, it’s time to take a look at your credit report. Your credit report might keep you from securing a personal loan. It might help to wait at least a year or two after your debts have been discharged to apply for a personal loan. 

If you’re feeling it may be time to start borrowing again or that you have a good shot at qualifying for a loan, take a look at the most common types of personal loans for bankruptcy. 

Secured Loans

A secured loan is a loan backed by collateral. Collateral can be anything you own that is valuable, including your home, car, jewelry or art. 

You’ll need to agree to sign over the asset and give it to the lender if you are unable to pay the loan. Remember that secured loans can be dangerous. You risk losing the asset you’ve put up for collateral if you can’t meet the terms of the loan.  

Unsecured Loans

Unsecured loans are loans that do not require you to put up collateral in exchange for borrowing money. Unsecured loans are assessed based on your credit history. If you still have a bankruptcy filing on your credit report it may be more difficult for you to be approved for an unsecured loan. If you are approved, you may face fees or high interest rates.  

Fixed-Rate Loans

You’ll almost always need to pay some form of interest whenever you borrow money. If you’ve been approved for a fixed-rate loan, the interest rate you are being charged will remain the same for the duration of the loan. Mortgages typically have fixed rates. 

Personal Rate Loans

Personal rate loans are typically unsecured, fixed-rate loans that need to be paid over a certain period. You’re typically free to spend the money from a personal loan in any way you wish. However, if you have poor credit it may be difficult to secure this type of loan. 

Personal Loan Requirements and Criteria

Different lenders have different requirements. You must meet certain criteria.

If you have a bankruptcy filing on your credit history but are doing well in other required areas, it will help your chances of approval. Take a look at some of the most common personal loan requirements and criteria:

• Credit report
• Payment history
• Debt-to-income ratio
• Income

Personal Loan Considerations

A bankruptcy filing will likely make it difficult to secure a personal loan. You may have to agree to higher interest rates or put up some of your assets for collateral. 

Another option is to seek out credit-builder loans. Credit-builder loans are designed specifically for people with bad credit. It can give you access to money and help you rebuild your credit. 

If you decide to apply for a credit-builder loan or another loan designed for people with poor credit, remember to investigate the lender thoroughly. It’s best to borrow money from legitimate financial institutions or banks. Find programs that have a track record of helping people rebuild their credit and offer affordable interest rates. It’s also important to understand the terms you are agreeing to. It’s easy to fall victim to predatory lenders looking to take advantage of your situation. 

Predatory loans are designed to benefit the lender at your expense. They can come with high interest rates or other unfavorable terms that can make them difficult to repay. You risk getting caught in a debt cycle or further harming your credit score. 

The best way to avoid predatory loans is to only work with licensed lenders. Avoid lenders that sound too good to be true, rush you to sign, offer packaged services or have blank spaces in important documents. 

Personal Loans vs. Credit Cards

Personal loans offer a lump sum of money for a fixed interest rate and fixed payment period. Credit cards can have variable interest rates and often come with higher interest rates than personal loans. 

While personal loans need to be paid off by a set date, credit cards offer more flexibility. You can continue to use credit so long as you continue to make payments on your balance. Either can be a viable option if you need cash. However, you are much more likely to fall into debt when you rack up a balance on your credit card than if you were to take out a personal loan. 

Personal Loans After Bankruptcy

Finances can feel personal after bankruptcy. And getting approved for a personal loan while you still have a bankruptcy filing on your credit report can be challenging but not impossible. Your bankruptcy filing will have less of an impact on your credit score as more time goes by. Shop for different lenders, and stay away from predatory lenders at all costs. 

Start with Benzinga’s recommended lenders to find a personal loan after bankruptcy today.

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