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Personal Loan for People in Bankruptcy

Sharon McDougall - Updated - 2nd August 2023 - 3 minutes to read

Getting personal loans after bankruptcy discharge can be a problem because your credit file will be adversely affected by the insolvency. It is possible, however, but might take a little longer to source the best provider. Some lenders specialise in this type of loan, whilst others operate a separate department within their larger organisation.

If you have formally been declared insolvent, you may be wondering if you will ever be eligible for a bankruptcy personal loan in the future. During the 12 months of your formal bankruptcy, you will be unable to borrow or obtain credit of more than £500.

Some discharged bankrupts go on to successfully apply for borrowing after the initial 12 months, despite the significant negative effect that bankruptcy has on their credit rating.

All three credit reference agencies in the UK – Equifax, Experian and CallCredit – keep a note on file of bankruptcies, or any other formal debt solution, for six years. During the period of bankruptcy you will be unable to apply for borrowing, but once discharged it is a good idea to start rebuilding your credit file.

What are bankruptcy personal loans?

Some debtors coming out of bankruptcy choose to apply for a credit card to rebuild their credit rating. Others prefer a small personal loan after their bankruptcy discharge, as the features of a personal loan make it more attractive. You will know exactly how much you have to pay each month, and over what timescale.

It is these fixed terms and amounts that generally attract people to personal loans for bankruptcy, rather than the flexible payments to a credit card which could be misused, landing you in uncontrolled debt again.

What can you expect from a personal loan after bankruptcy?

What should I consider for a bankruptcy personal loan?

Most lending institutions operate a specific policy for bankruptcy personal loans. They may require you to have been discharged from bankruptcy for a minimum time period, two or three years, for example. Some lenders specify that you need to have successfully handled two other lines of credit since your bankruptcy.

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Sharon McDougall


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