If you’ve ever had to go through bankruptcy, you’ll know it can be soul-destroying. Recovering from such an ordeal can be a long and difficult process, but now that your bankruptcy period is over you can start to focus on getting your credit back on track.
How long does bankruptcy last in Australia?
Bankruptcy lasts for three years, however differs slightly if you voluntarily apply for bankruptcy, or if a creditor applies to make you bankrupt.
If you voluntarily apply for bankruptcy, it will end three years and one day from the date the AFSA (Australian Financial Security Authority) accepts your application. If a creditor has applied to the courts to have you declared bankrupt, it will end three years and one day from the date the AFSA receives your statement of affairs.
After this time has passed, you will be discharged from bankruptcy.
How long does bankruptcy stay on your credit record?
Bankruptcy will stay on your credit record for at least two years after you are discharged from bankruptcy. This means, including the three years you are under bankruptcy, it will be on your credit record for a minimum of five years from the date you declare bankruptcy.
What is bankruptcy?
Bankruptcy can affect anyone regardless of age, income, gender or occupation. It occurs when someone – either an individual or a company – is unable to repay their debts. Sadly, circumstances like unemployment or redundancy, an uninsured loss or some other completely unforeseen difficulty that was out of your control can all have such a serious effect on your financial situation.
In the event of being in a situation where you are no longer able to pay your debts, you can either declare bankruptcy voluntarily or legal proceedings can be taken against an individual or a company by a creditor in the hopes of recouping some or all of the money owed.
You can find information on bankruptcy and how it works on The Australian Financial Services Authority.
How to recover from bankruptcy
If you have been declared bankrupt, you can help get your finances back on track if you:
- Co-operate with your Trustee in Bankruptcy.
- Avoid applying for loans until your bankruptcy is discharged.
- Get into the routine of running a realistic household budget.
Once your bankruptcy has been discharged, you can work your way to restore your financial goals and potentially buying a home.
Many bank lenders can be uneasy about lending to someone who has previously been declared bankrupt, and for this reason, many applicants have had their loan application declined. However, don’t think that because you have been declared bankrupt no lender will ever want your business again.
When can you get a home loan after bankruptcy?
If you have been officially discharged (by more than 1 day) or entered a debt agreement, there are a number of home loan options that might suit you. In some cases, we may be able to assist you with finalising a debt agreement or structuring debt consolidation into your home loan through refinancing.
While there is no restriction when it comes to applying for a mortgage after bankruptcy ends, it is important to assess your financial situation and seek advice when needed, to ensure that the new loan doesn’t put you in the same situation you were in.
How can Pepper Money help with a mortgage after bankruptcy?
As a specialist lender, we look at things differently and don’t see your bankruptcy history as something that should hold you back from your future home loan happiness. We understand that sometimes circumstances beyond your control can lead to a default, leaving you with an impaired credit history. Unlike traditional lenders who may use automated credit-scoring methods, we’ll talk with you one-on-one to learn more about your individual situation.
Discharged from bankruptcy, or experienced some type of credit impairment?
Let us get to know you to understand how this credit issue came about and what has happened since then. For example, being able to show that you have been in stable employment with a reliable income and savings plan patterns since then could help prove that you are in a more stable situation now, which means that you’re now able to consider a mortgage.
Whatever your case, if you’re looking to apply for a mortgage after bankruptcy, you can begin by talking with one of our Lending Specialists on 137 377 or enquire online here. The more we learn, the better we can help.
We’ve helped thousands of Australians in a wide variety of credit and bankruptcy scenarios achieve their goals, read their stories.
This article provides you with factual information only and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser. Neither Pepper nor its related bodies, nor their directors, employees or agents accept any responsibility for loss or liability which may arise from accessing or reliance on any of the information contained in this article. For information about whether a Pepper loan may be suitable for you, call Pepper on 13 73 77 or speak to an accredited Pepper Money broker.
All applications are subject to the credit provider’s credit assessment and loan eligibility criteria. Terms, conditions, fees and charges apply. Information provided is factual information only and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser.
©Pepper Money Limited ABN 55 094 317 665; AFSL 286655; Australian Credit Licence 286655 (“Pepper”). All rights reserved. Pepper is the servicer of home loans provided by Pepper Finance Corporation Limited ABN 51 094 317 647. Pepper Asset Finance Pty Limited ACN 165 183 317 Australian Credit Licence 458899 is the credit provider for asset finance loans.