FAQs | What Happens When You Become Bankrupt?
Bankruptcy is recorded on your credit record for 5 years or 2 years after your bankruptcy ends, whichever is greater.
Whilst ever bankruptcy is recorded on your credit record, you will find it hard to get credit from lenders.
You may be able to get loans during bankruptcy from second-tier lenders, however, they will charge you extremely high interest and we do not advise that you put yourself in that situation.
You should note that if you seek credit from a credit provider while you are bankrupt and the amount you borrow is over you must inform the credit provider that you are bankrupt. Also, if you apply for a loan while bankrupt it may have a negative impact on your credit record.
When you become bankrupt your repayment obligations for credit cards, loans, and many other debts will end. You may find that this will free up some of your income for you to save for future purchases, reducing your need for credit.
Your bankruptcy is also recorded on the National Personal Insolvency Index (NPII) this is a permanent record of every person who has been bankrupt in Australia.
If you want to borrow money after your bankruptcy is finalised and your credit rating restored, you will be in the same position as everyone else who applies for a loan. The lender will look at whether you have sufficient income, a good savings history, the ability to service the loan, and you have the required deposit.
Nicholls & Co have a complementary ‘help desk’ to answer your questions on bankruptcy. Call Nicholls & Co on 1300 060 122 or email email@example.com.