Bankruptcy is one of the most difficult times a person can go through, with far-reaching effects on their finances, emotional health, well-being and lifestyle.
However, all is not lost - at Pepper Money, home loans for people who have been discharged from bankruptcy are still a possibility.
Bankruptcy at a glance
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.
Getting your finances back on track
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.
Here are some tips that could help you bounce back after bankruptcy.
1. Set up a budget
It’s important to keep track of your income and expenses to ensure they balance at the end of each month. Setup a detailed budget that covers your occurring expenses, such as bills, rent or mortgage repayments, transport costs, food, and all of your subscriptions or membership fees. This will then let you calculate how much money you have left over at the end of each month or pay cycle.
2. Start saving
Every dollar you don’t spend is a dollar you could have saved. After bankruptcy, it’s integral to have a buffer or ‘rainy day’ fund available to cover any unexpected bills or outgoings.
3. Keep track of your bankruptcy papers
Make sure you know where to find all of your debt details, as lenders will ask to see copies of past documentation. It’ll also ensure you’re on-top of any mandatory repayments – just don’t forget to factor these into your monthly budget.
4. Consider which lender you’re buying from
Lenders offer a variety of interest rates and can have vastly different loan terms and conditions. It’s important to make sure you read the fine print before engaging with a lender.
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 such 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.
At Pepper Money, we have flexible home loan solutions which may be suitable for people with an impaired credit history, provided we can be satisfied that your application otherwise complies with our normal credit assessment and loan suitability criteria.
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.