Getting A Loan After Going Bankrupt

Jun 1st, 2020

Last updated on August 6th, 2020 at 02:33 pm

In Nigeria, there are no comprehensive policies or law on bankruptcy. Individuals are declared bankrupt when they are unable to meet their total liability. But corporate bodies are insolvent in the event of the company being unable to pay for its debts. Bankruptcy is often misunderstood as a financial ruin for life when itis a way to give the debtor a clean slate to his/her debts.

The Nigerian bankruptcy act of 2004 stipulates that a person (the debtor) is declared bankrupt if a creditor has obtained a judgment or final order against him for any amount, and execution thereon, not having been stayed, has a bankruptcy notice served on him.

How To Get A Loan After Bankruptcy

While applying for a personal loan in Nigeria after bankruptcy, there are some steps that you should follow:

  • Check your credit reports: check your credit report regularly and ensure that it is being updated to reflect an accurate report. You can get your free credit report annually.
  • Proof Of Income: As you apply, you must prove your current flow of income. This will show that you can pay back the loan even if you are bankrupt. The proof will include your side hustle or any other form of income that you may get to reduce the chance of being rejected.
  •  Disclose The Facts: You can prepare a note explaining the conditions that led to the bankruptcy and how you’re solving the issue. Not every bankruptcy is caused by mismanagement of funds. If some unforeseen circumstances caused your bankruptcy, you might get a better chance.

You should compare the terms and conditions of different lenders. Look online for where you can get the best personal loan deals and see the loans and a variety of options of where to get them. You might not be eligible for the best rates, but you might still get something that works perfectly for you. 

How To Improve Your Chances of A Loan

While it might take years for your bankruptcy to leave your credit report for good, the first step to increase your chances of getting a loan is to improve your credit score. You have to make conscious efforts to build your credit score as it improves your chances of getting a loan, and one way to do that is to follow the guidelines stipulated in the 5Cs of credit. However, it is strongly advised that you wait for a year or two after bankruptcy before applying for a loan.

There are ways to increase your chances, and they include:

  • No missed monthly bill payments
  • A secured loan is always better. Be sure to pay off the loan balance every month
  • Ensure you keep a very low credit profile to at least less than 40% of your overall credit allowance


While it might be harder to get loans after bankruptcy, you might have to pay higher rates when getting a personal loan. However, there is no reason to pay ridiculous rates. Watch out for lenders and others who will tell you they don’t do credit checks because it might be a trap to get you to pay high-interest rates. 

You should also consider looking for alternatives to personal loans if you can’t qualify for a reasonable interest rate.

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