Bankruptcy doesn’t have to be the end of the road. Here’s how to get a personal loan after you’ve been declared bankrupt.
Filing for bankruptcy is not an easy step for anyone to take. However, the most difficult process usually comes when you’re trying to rebuild your finances, your credit and your life. During your bankruptcy or after you are discharged you may find yourself in need of a loan – but are there lenders who will be willing to consider you for a second chance?
Can I get a loan if I’m bankrupt?
Yes, you are able to get a loan if you are a discharged bankrupt or even if you are currently bankrupt. You will be more limited in terms of the lenders you have to choose from, and the fees and rates will also be considerably higher on bankrupt loans. You may also be required to attach an asset as security or apply with a guarantor. Find out about your loan options below and see what you might be eligible for.
Before you apply for a loan while bankrupt…
- As your assets and income may have been affected by bankruptcy, deciding whether or not you can afford the repayments is an important consideration. What will your repayments be and how will they work with your budget?
- Applying for a loan when you’re in any challenging financial situation isn’t a decision that should be taken lightly. This is especially true when you are bankrupt. Consider why you are taking out the loan and if there is any other way you can pay for what you need.
- Speaking to a free financial counsellor might be an option for you to consider before you apply for any financial product. You can give one a call on 1800 007 007.
What kind of bankrupt loans are available?
If you’re in need of financing and you’re currently bankrupt or have bankruptcy listed on your credit file, the following loan options might be an option for you:
- Payday loan. These are short term loans up to $2,000 with repayment terms between 16 days and one year. You can also find loans up to $5,000 or even $10,000. Lenders have flexible lending criteria, and while they won’t all consider bankrupt applicants, some will.
- Personal overdraft. Your current bank may be willing to approve you for a small personal overdraft if you have a good history with it.
- Personal loan. Bad credit personal loans are available from lenders, some for large amounts.
- Business loans. If you’re bankrupt you still may be able to apply for a business loan. These loans are larger, some for amounts up to $500,000, and are designed to finance a range of business purposes.
- Car loan. Secured loans can be easier to be approved for than car loans as they are less of a risk to a lender. You can consider a bad credit car loan and attach your newly purchased vehicle to the loan as security
How can I be approved for a bankrupt loan?
While there are lenders who will consider applicants who are or who have previously been bankrupt, filling out the application is not all it takes to be approved. Here are some of the criteria that will be in place when you're considered for a bankrupt loan:
- Employment. You may be required to be employed, although unemployed loans are available. Different criteria are in place, for instance, your employment may need to be regular and ongoing and you may not be accepted if you're self-employed or part-time, etc. Check what the lender’s restrictions are before applying.
- Centrelink. While you may still be considered for a loan if you receive Centrelink payments, lenders often have restrictions as to what percentage of your income can be made up of benefits (usually 50% if the restriction is in place). Another common restriction is that your loan repayments can’t exceed a certain percentage of your Centrelink income (typically 20%).
- Income. How much do you earn? Lenders often have minimum income requirements in place. They may allow your income to be from employment and Centrelink, or may need it to be solely from regular employment, but it will usually need to be over a certain amount per week or month.
- Assets. For bankrupt loans, the lender may require you to secure an asset to the loan as a guarantee in case you default on the loan.
- Ability to manage your repayments. This is the main requirement lenders have when considering you for a loan. Does your income allow you to easily manage your repayments after taking into account your liabilities and debts? If your repayments will be manageable and you meet the lender’s other criteria, you will be able to apply.
- Guarantor. If you don’t meet the lender’s criteria, you may be able to apply with a guarantor to increase your chances of being approved.
What options for I have for a loan while bankrupt?
|Brand||Does it approve bankrupt applicants?||Criteria|
|Australian Lending Centre||You're able to apply. Standard lending criteria will apply.|
|Cash Converters||You can be approved if you've been discharged from a Part 9 Debt Agreement.|
|Cash Train||You can apply as long as you meet the minimum requirements.|
|Dollars Direct||You cannot apply.|
|Fair Go Finance||You need to have entered into bankruptcy at least 12 months previously.|
|Ferratum||No credit checks will be conducted when you apply.|
|Loan Ranger||You cannot apply.|
|Max Finance||You can apply if you are a discharged bankrupt.|
|MyCashFinance||If you're bankrupt you are not eligible but can apply with a guarantor, if you are a discharged bankrupt you can apply.|
|Nimble||You cannot apply.|
|Needy Money||You're able to apply.|
|Payday 24/7||No credit checks will be conducted when you apply.|
|Rapid Finance||You can apply, your application will be judged on a case-by-case basis.|
|Sunshine Loans||You cannot apply if you are a current bankrupt.|
|Wallet Wizard||You can apply if you're a discharged bankrupt.|
|Yes Loans||Current or discharged bankrupts can apply.|
What to know about bankruptcy and Part 9 Debt Agreements
Are you bankrupt or under a debt agreement? Understanding the differences, and similarities, are important.
- How long it lasts. Bankruptcies last for a minimum of three years and a maximum of eight. You are only under a debt agreement until you repay your debts.
- Your credit file. Bankruptcies will show on your credit file two years after the date you were discharged or five years from the date you became bankrupt, whenever is later. A debt agreement appears on your file for five years from the start date.
- Your name on the National Personal Insolvency Index. If you're bankrupt your name will be listed forever, those on debt agreements are only listed for a limited amount of time.
- Eligibility. Bankruptcy has no income, asset or debt thresholds but debt agreements do. You can't be bankrupt if you were previously bankrupt, and you can't enter a debt agreement if you've been bankrupt or under a debt agreement in the past 10 years.
- Employment and income restrictions. Those under debt agreements have no restrictions, but bankrupt people have their income restricted and certain industries may have restrictions regarding employment.
- Other restrictions. If you're bankrupt you have many restrictions, such as not being able to travel overseas without consent, and those under debt agreements usually need to disclose it if you own a business in another name.
Understanding bankruptcy: The questions we’ve been asked
Here at finder.com.au we get questions from readers all the time about bankruptcy. We’ve brought together some of the most common questions to help shed some light on a complicated financial process.
How long does bankruptcy last?
You are usually considered bankrupt for three years, but this can be extended to five or eight years if your trustee lodges an objection to your discharge.
When will my bankruptcy end?
Bankruptcy is considered ended as the result of an annulment or you being discharged.
- Discharged. If you became bankrupt by presenting your own petition, you will be due for discharge three years and one day after you filed that petition and your statement of affairs. If you became bankrupt by a sequestration order of the court, you will be due for discharge three years and one day after your statement of affairs was accepted.
- Annulment. This is the cancellation of your bankruptcy and can happen when your debts are paid in full, your creditors accept a composition or agreement, or you successfully appeal to the court for an annulment.
How long does my bankruptcy remain on my credit file?
Your bankruptcy is listed on credit reporting agencies records for two years from the date you are discharged or five years from the date you became bankrupt, whichever is later.
After the listing is removed from my file will lenders be able to see I’ve been bankrupt?
Following the end of your bankruptcy, your name will remain forever on the National Personal Insolvency Index (NPII) as a discharged bankrupt. This information is publically available and any person can pay a fee to conduct a search of the NPII – this includes creditors, journalists and potential reporters.
Can I apply for a no credit check loan without telling the creditor I’m bankrupt?
There is a legal requirement for you to disclose your bankruptcy when applying for a loan over a certain amount. Currently, the threshold is $5,447.
Can I apply for a personal loan to take a holiday?
While you’re able to apply for a loan, overseas travel is restricted if you’re still currently bankrupt. You need to apply for permission to travel overseas with your trustee if you are currently bankrupt.