Everything you need to know about bankruptcy loans

Declaring bankruptcy is a drastic step which brings with it many potential hurdles, both financially and emotionally. If you are bankrupt, you won’t be able to take out a loan. However, there are still lending and finance options available to you if you have filed for bankruptcy in the past, you just need to know where to look. Read on to find out more about how to get a loan after bankruptcy.


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Representative 824.7% APR. Representative Example: If you borrow £250 over 6 months at a Representative rate of 824.7% and an annual Interest rate of 248.19% p.a. (fixed), you would pay 6 instalments of £81.41. The total charge of credit will be £238.46 and the total amount payable will be £488.46.
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Representative 824.7% APR.

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Table of contents

Written by Inez Miedema
Read time: ~5 mins
Published: 5th March 2020 Updated: 9th September 2020

How to get a loan after bankruptcy

It can be very difficult to get bankruptcy loans and you won’t be allowed to take out credit when you are bankrupt. During bankruptcy you must, by law, disclose that you are bankrupt if you apply for credit of more than £500. Many lenders will ask whether you are bankrupt even if you apply for less than £500. You must answer lenders' questions truthfully. Even if you don’t, however, the bankruptcy order will show up on your credit record, which the lender will see when they run a hard credit search as you complete your application. There is no way of hiding this information from a lender.

Loans after bankruptcy discharge

Bankruptcy will still seriously impact your credit score for six years after you are discharged. Bankruptcy and student loans or personal loans are difficult things to juggle. Securing a student loan or other type of loan isn’t impossible after that six-year period, although there will be a much narrower choice available to you. You are only likely to be able to borrow small amounts. Interest rates will be higher than for someone who has never been bankrupt. Due to the bankruptcy mark on your record, high street banks are likely to refuse to lend to you even after you’ve been discharged from bankruptcy. The good news is that, there are lenders who specialise in lending to people who have a bad credit history, including bankrupt loans and bankruptcy student loans.

Do payday loans cause bankruptcy?

Payday loans can have very high interest rates, in other words, they are expensive loans. Taking out too much debt that you cannot afford is very unwise. It can lead to a negative spiral that can ultimately cause bankruptcy. When you apply for a loan, the lenders will check your affordability, but it is still your responsibility to understand whether you can pay back a loan before taking it out.

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Advantages and disadvantages of bankruptcy

If you are reading this article and considering bankruptcy as an option, always take professional advice. The effects are serious and long term and there may be alternatives such as consildating debt.

If you are unable to pay your debts, one of your options is to declare bankruptcy. This can help you clear your debts, but is still a drastic step and it has an impact on your profile in the eyes of lenders and creditors. There are financial restrictions on people who have filed for bankruptcy, and your ability to obtain loans and credit can be seriously affected.

However, if you are already in debt and wondering what to do next, it’s important to note that bankruptcy can also provide great relief to many people in a variety of circumstances. If your debts have spiralled out of control it can give you breathing space and the chance to make a fresh start. Once the bankruptcy has been discharged, you will no longer need to pay the majority of your debts. Student loans and court orders are not affected by bankruptcy. It may be possible to obtain loans after bankruptcy discharge at more affordable rates than those for bankruptcy loans.

Before you decide if going bankrupt, you need to consider a few things:

  • Bankruptcy may not be suitable if you work in certain professions. Some professional associations ban bankrupts.
  • Even if you do not work in one of these professions, being bankrupt makes running a business very difficult.
  • Bankruptcy orders are part of the public record and you may not wish your debt problems to become public.
  • When you are made bankrupt, your home can be sold and the money used to pay the people you owe money to.
  • Even if you do not own your home, some tenancy agreements do not allow anyone who is bankrupt to rent the property.

How do I apply for a loan after bankruptcy?

As mentioned above, bankruptcy will leave a mark on your credit file for a minimum period of six years. If you want to apply once you’ve been discharged from bankruptcy, follow the following steps:

  • Fill out the application form truthfully on Choose Wisely
  • Compare loan options and costs
  • Click out to the lender of your choice
  • Complete the application on the lender’s website
  • Provide the correct documents and information

If you're not accepted by any lenders, the best thing to do is contact the Money Advice Service or a local debt charity for advice.

Bankruptcy loans FAQs

How long will bankruptcy impact your credit score?

Declaring yourself bankrupt is a serious decision to make. In some cases you might consider filing for bankruptcy if you have a severe debt problem. Before doing so however, you need to consider a few things. To find out more, you can visit the Citizens Advice Service pages on bankruptcy and bankruptcy debts

What other types of bankruptcy loans are available?

You cannot borrow money when you’re going through bankruptcy. It is not impossible to get a loan after bankruptcy discharge, but it will be difficult as the bankruptcy will leave a mark on your credit score for 6 years minimum. including during the six year period during which you have a mark on your credit file. Options available include loans from specialist bad credit lenders, guarantor loans, car finance and an approved overdraft.

Written by
Inez Miedema
CMO & Take Control Author at Choose Wisely

Inez came on board in the Summer of 2019. Her main focus has been helping as many people as possible find our website through online marketing, writing content and partnership deals. She boasts 6 years of FinTech experience with other brands and has an in-depth knowledge of our customers.

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Important Information.

All of the information in this guide is correct at the time of writing.

Rates shown are quotes based on your personal circumstances, are subject to status and are available to those aged 18 and over. Rates available range from a minimum of 3.9%APR to a maximum of 1575%APR Representative and loan repayment periods range from 3 to 60 months.

[*][†] Once accepted, your loan can be transferred to you in as little as 15 minutes. The time that it takes for the loan to show in your bank account will depend on your lender and your bank.

If you need financial advice you can visit stepchange, speak to citizens advice, call the national debtline or speak to moneyhelper.org.uk.

If you've been declined, please refer to your credit report to gain an understanding of why before making further applications.
Your score can be accessed for free via any of the main credit reference agencies such as Credit Karma, Clearscore or Experian.

Warning: Late repayment can cause you serious money problems. For help, go to moneyhelper.org.uk