PRIVATE PERSONAL LOAN WITH BANKRUPTCY (CHAPTER 13 and 7)

Why is a private personal is difficult to obtain after or during bankruptcy ?

A private personal loan is one of the hardest forms of credit to obtain during or after bankruptcy, and here’s why:

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1. Bankruptcy Signals Very High Risk

When you file for Chapter 7 or Chapter 13 bankruptcy, it shows lenders that you were unable to meet your past financial obligations. This is the strongest possible negative mark on a credit report. Since private personal loans are usually unsecured (no collateral), lenders rely heavily on credit history to gauge risk. A bankruptcy tells them repayment risk is extremely high, so approvals become rare.

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2. Unsecured Structure = No Safety Net for Lenders

A private personal loan means the lender cannot repossess an asset (like a car or house) if you default, unlike with secured loans. After or during bankruptcy, you already have a track record of nonpayment or debt discharge. Lenders know they’d have no recourse to recover losses, which makes them reluctant to approve without charging very high interest or demanding strict conditions.

What is more difficult, obtaining a loan under chapter 7 bankruptcy or chapter 13 ?

The difficulty of getting a loan depends heavily on which type of bankruptcy you filed:

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1. Chapter 7 Bankruptcy (Liquidation)

• Debts are discharged quickly (usually within 3–6 months).
• Bankruptcy stays on your credit report for 10 years.
• Lenders see you as very high risk because you have already had debts wiped away, meaning they might fear you’ll walk away from new ones too.
• During an active Chapter 7, it’s virtually impossible to obtain a loan until the bankruptcy is discharged. After discharge, you can apply, but only for secured loans, subprime loans, or with very high interest rates.

📌 Result: Loans are extremely difficult to obtain, and recovery takes longer because of the 10-year credit impact.

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2. Chapter 13 Bankruptcy (Repayment Plan)

• You repay debts over 3–5 years under court supervision.
• Bankruptcy stays on your credit report for 7 years (shorter than Chapter 7).
• Getting a loan during repayment is possible, but you must get trustee/court approval to show it won’t jeopardize your repayment plan.
• After successfully completing the plan, lenders may be more willing to extend credit, because you’ve demonstrated financial responsibility by following through on repayment.

📌 Result: Loans are still difficult to obtain, but lenders sometimes view Chapter 13 filers as less risky than Chapter 7 because they are repaying part of their debts.

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3. Which is More Challenging?

• Chapter 7 is more difficult because debts are discharged completely, the bankruptcy lasts longer on your record (10 years), and lenders perceive you as the riskiest borrower.
• Chapter 13 is slightly less difficult because you’re actively repaying some debts, it falls off your record sooner (7 years), and trustee approval allows limited borrowing during the plan.

Which lenders in the USA make available personal loans with bankruptcy (chapter 7 or chapter 13)?

Here are the lenders in the U.S. known to offer personal loans even after Chapter 7 or Chapter 13 bankruptcy, along with quick access links to their official websites for easy reference:

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Lenders Offering Personal Loans Post-Bankruptcy

1. Avant
   • Offers unsecured personal loans ranging from ~$2,000 to $35,000, and is known for being accessible to borrowers with fair or even poor credit.
   • Apply here: Avant Personal Loans & Credit Cards
2. LendingClub
   • Historically a major peer-to-peer lending platform that may approve loans for borrowers post-bankruptcy. Borrowers report successful loan approvals even 45 months after Chapter 7 discharge.
   • Visit site: LendingClub — note: LendingClub has shifted its model and may not offer new peer-to-peer loans; check for current offerings.
3. OneMain Financial
   • Another lender known to work with borrowers who’ve had bankruptcies, offering unsecured personal loans.
   • (Note: They don’t have a direct link available in the sources yet, but their official website typically follows the format: onemainfinancial.com.)
4. Upgrade
   • Offers personal loans to those with bankruptcy histories. Minimum credit score around 580.
   • (Website: upgrade.com, though not explicitly cited.)
5. Upstart
   • Known for flexibility on credit history (minimum score as low as 300), and accepts borrowers with bankruptcy filing in their history.
   • (Website: typically upstart.com, though not explicitly cited.)
6. PenFed Credit Union (PenFed)
   • A credit union that is noted for being “bankruptcy-friendly” and offering reasonable rates on personal loans.

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