Loan Advice Best Practices Company Profiles

Payday Loans for Bankrupts

Date Published: Mar 09, 2021
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Sophia Rodriguez, reviewer at

Declaring bankruptcy can have a negative impact on your credit report. After filing, a consumer will likely have to wait years before traditional lenders will work with them again.

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Fortunately, there may be a path to approval using payday loans for bankrupts. Alternative financing has more lenient eligibility criteria, and lenders in this sector work with people of all credit types.

Bankrupt Lenders

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Even if you are discharged from bankruptcy, you may still have difficulty applying for traditional loans because of your credit history. Chapter 13 will show on your credit file for seven years, and you are required to make partial repayments of your debt. Chapter 7 remains on your file for 10 years, and you are not required to pay back your debt.

That's when alternative lenders come in handy. OpenCashAdvance works with a vast network of lenders, including those who care more about an applicant’s income than credit history. When applying for payday loans online, we can try to pair you with a lender that provides payday loans for bankrupts.

Eligibility Requirements

Underwriting is the process of determining loan eligibility. Traditional lenders tend to look mostly at credit scores when making this decision. In contrast, payday lenders may consider income as the main factor in an applicant’s ability to pay back bankruptcy loans on time.

If you generate revenue each month (e.g., through employment) a lender may be interested in working with you.

Some lenders have minimum monthly income requirements. Sometimes, the higher your salary, the better the chances of loan approval.

Keep in mind that to apply for a payday loan, you need to be at least 18 years of age, a legal US resident, and have an active bank account. Some payday lenders may still grant you funding if you don't have a checking account.

Secure Your Loan with Collateral

As you may already know, people who have a good credit history are prone to take out loans with minimal interest rates and get better funding. They also may not need to secure the loan.

Although payday loans are unsecured loans, you may want to secure your loan with collateral if you have a bad credit score and troubling history.

Securing your loan with a valuable asset will act as a guarantee in case you default on your loan. Some personal loans after bk providers may let you secure the loan with a guarantor. In case you fail to pay back the borrowed amount on time, it is the responsibility of the guarantor to cover the outstanding amount.

Collateral may let you borrow a loan with a lower interest rate.

Can You File Bankruptcy on Payday Loans?

Man looking down at wallet.

Federal and state legislation helps regulate payday loans. Also, the Consumer Financial Protection Bureau regulates the lending industry.

Payday lenders cannot charge any criminal actions against a borrower who has failed to pay back their loans. Depending on state law, when an applicant fails to pay back their loans on time, they can roll over or extend their loan.

With that said, you can file bankruptcy on payday loans. In Chapter 7, you can discharge a payday loan. In Chapter 13, you have to pay a small portion of it. However, suppose you borrowed your payday loan shortly before filing bankruptcy (usually 70 to 90 days). In that case, the lender may accuse you of presumptive fraud and file a lawsuit.

Presumptive fraud is when someone takes out a loan knowing that they will file for bankruptcy. The lender has to prove to the court that the borrower acted with fraudulent intent, and the applicant has to prove the opposite.

How to Avoid Bankruptcy

In order to avoid bankruptcy, it is best to borrow only the amount that you need and that you can pay it back on time. Usually, cash advances and payday loans should be paid back in up to 14 days or by the borrower's upcoming payday.

If you can't or don't want to secure your loan, keep in mind that lenders may charge you a higher interest rate. Before taking out a loan, do your financial calculations and determine how much you will be able to pay back on time.

If you need some extra cash, a loan isn't your only option. But before you consider any of these alternatives, think long and hard about whether you really need to borrow the money or not.

Tips to Build Credit After Bankruptcy

Here are two tips on how you can build your credit after bankruptcy on your own or with the help of a friend who has a good credit score.

Get a Credit Card

Getting a credit card after declaring bankruptcy can help you to rebuild your credit score. If managed responsibly. Making on-time payments using your credit card is considered an excellent way to build your credit score.

Keep in mind that after Chapter 7, you can apply for a credit card after around three months. In Chapter 13, you will need to wait three to five years.

Ask a Friend to be a Co-Signer

If you want to borrow a large loan and the bank doesn't want to work with you because of your credit history, consider asking a close person who has a good credit score and a high income to be a co-signer on the loan. When you make on-time payments on your loan, it will show on your credit report and gradually increase your credit score.

Keep in mind that both signers are responsible for the debt. If you don't make on-time payments, the co-signer will have to. That's why you need to be certain that you can pay back your loan on time before taking out a co-signer loan, so you won't end up hurting your credit score again alongside your valuable friendship.

Become an Authorized User

Becoming an authorized user is a great way to get your credit back on track. Each time the card owner pays back their loan on time, your credit score will rise. Just make sure that the credit card that the card owner is using reports to the credit bureaus. Otherwise, you will not benefit from becoming an authorized user.

Payday Loans for Bankrupts Alternatives

A pile of credit cards.

Even the best loans for discharged bankrupts sometimes aren’t the right fit. Here are five alternative loans for people with bankruptcy that may help them get through hard times and get back on their feet again.

Credit Card

If your bankruptcy has been discharged, a credit-building credit card may be a good option for you. These types of cards often have low credit limits and high-interest rates. However, if you use them responsibly by spending a small amount and making your payments on time, you may find your way on the right path of rebuilding your credit history.

Title Loan

A title loan is another loan option for bankrupts. It is a secured loan where you use your car's title as collateral and get funding up to 50% of your vehicle's value. To apply for a title loan, you must present a government-issued ID, proof of income, lien-free title, and an active bank account. Some lenders may ask for additional documents.

Title loans are not limited only to cars. Some lenders may also accept other types of vehicles, such as motorcycles and boats. During the term of the loan, you will continue using your vehicle. However, it best to ensure that you can pay back the borrowed amount because if you default on your loan, the lender will legally repossess your car.

This type of funding is not available in every state.

Seek Help from Nonprofit Organizations and Local Charities

Some nonprofit organizations and local charities may be able to help individuals who have filed bankruptcy and are struggling financially. They can offer free financial support such as providing food, utilities, and even paying for your rent. If a local charity is able to assist you, you can avoid taking out another loan.

Ask for Payment Extensions

Try to negotiate with your bill provider and explain your current financial situation to them. If they are understanding, they may provide you an extended payment plan.

Ask for a Payroll Advance

If you are an employee and you need short-term funding, you can ask your employer to give you an advance on your salary. If your employer is understanding, they may help you dodge another loan.

Ready to Get Started?

We invite you to fill out our form to request a payday loan for bankrupts. It will only take a few minutes, and you will receive real-time on-screen results. will try to connect you with a lender that may meet your financial requirements.

Ana-Maria Sanders, author at OpenLoans
Lead Writer
Ana-Maria Sanders is a highly-regarded writer with over a decade of expertise in the personal finance sphere, specializing in loans and credit cards.
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