How Long is the Wait to Get a Loan After Filing Bankruptcy in Oklahoma?

How long you must wait to get a loan after filing bankruptcy depends on several factors, including the type of bankruptcy you filed, the kind of loan you are seeking, and your efforts to rebuild your credit. Filing for bankruptcy can significantly impact your ability to obtain credit, but it doesn’t mean you’ll be unable to get a loan forever.

Chapter 7 vs. Chapter 13 Bankruptcy

The type of bankruptcy you file plays a significant role in how long you must wait to obtain a loan. Chapter 7, also known as “fresh start” bankruptcy, involves discharging most of your debts, giving you a fresh start. However, it stays on your credit report for 10 years from the filing date. Lenders will view this negatively when considering your loan application, especially in the first few years after discharge. That said, some home loan lenders may approve a loan after 2-4 years if you’ve made efforts to rebuild your credit. Other lenders like car loans will begin to make offers for credit as soon as your bankruptcy case closes. A consideration for lenders after you file is that you can only file every eight years. To them this means that they can come after you for the debt free from the worry you might file again if its within the eight years period.

Chapter 13 bankruptcy involves setting up a repayment plan over 3-5 years. Unlike Chapter 7, Chapter 13 stays on your credit report for 7 years from the filing date. The advantage of Chapter 13 is that you are working to repay your debts, which reflects more positively on lenders. In many cases, you can qualify for certain loans after 1-2 years, especially after you complete your repayment plan.

Waiting Periods for Different Types of Loans

The waiting period to get a loan after bankruptcy varies depending on the type of loan you are seeking.

Mortgage Loans: The Federal Housing Administration (FHA) offers loans to borrowers with less-than-perfect credit. For these, the waiting period after a Chapter 7 bankruptcy is typically 2 years from the discharge date. After Chapter 13, you may be eligible 1 year into your repayment plan with consistent payments and court approval.

Conventional loans have stricter requirements. After Chapter 7 bankruptcy, you may need to wait 4 years from the discharge date. After Chapter 13, the waiting period is typically 2 years from discharge or 4 years from dismissal. Additionally, veterans may be eligible for VA loans after bankruptcy. For Chapter 7, the waiting period is generally 2 years from discharge. For Chapter 13, you can apply after 1 year of successful repayment plan performance, with court approval.

Auto Loans: You can usually get auto loans sooner after bankruptcy, often within a couple months to a year after discharge. However, interest rates may be higher, and down payments may be required. Shopping around and choosing a lender that specializes in post-bankruptcy auto loans can help.

Personal Loans: Securing personal loans after bankruptcy takes time, but some lenders offer personal loans specifically for individuals recovering from bankruptcy. Typically, you may qualify for a personal loan within 1-2 years after discharge. However, the loan may come with higher interest rates and stricter terms.

Credit Cards: While not technically a loan, credit cards can be obtained shortly after bankruptcy. Secured credit cards, which require a deposit, are often available as soon as months after discharge and can help rebuild your credit over time.

Lender Requirements

After bankruptcy, lenders will scrutinize your creditworthiness more closely. The longer the time since your bankruptcy discharge, the more likely you are to be approved for a loan. Rebuilding your credit score is key to getting better loan terms, and higher credit scores make you more appealing to lenders. Lenders will also look at your current income and your ability to repay the loan in relation to your outstanding debt.

Read More About Bankruptcy Options Here

Bankruptcy Attorneys in Oklahoma

The waiting period to get a loan after filing bankruptcy depends on the type of bankruptcy filed and the kind of loan you are seeking. While Chapter 7 typically involves a longer wait than Chapter 13, it is possible to get approval for loans such as mortgages, auto loans, and personal loans within a few years of discharge. Rebuilding your credit and working with lenders who specialize in post-bankruptcy financing can improve your chances of securing a loan after bankruptcy.

If you need help, contact the Tulsa bankruptcy lawyers at Kania Law Office by calling us at (918)–743-2233 or online.