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What bankruptcy loans can I apply for?
In case of emergencies, you could borrow up to $6,717 without having to disclose your bankruptcy.
⚠️ Warning about Borrowing
Do you really need a loan today?*
It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.
Check your options before you borrow:
For information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor
Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan
If you are on government benefits, ask if you can receive an advance from Centrelink: Phone: 13 17 94
The Government's MoneySmart website shows you how small amount loans work and suggests other options that may help you.
* This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.
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You could apply for finance even if you're currently bankrupt or have been discharged from bankruptcy. These loans can tide you over in an emergency or help you purchase a car. Loan amounts are typically smaller and feature high interest rates and fees.
What are bankruptcy loans?
A bankruptcy loan offers credit for those who are currently bankrupt or have been discharged from bankruptcy. Getting a loan in such instances may seem impossible. Bankruptcy generally lasts for a period of 3 years, but it will appear on your credit report for 2 years after you've been discharged. This may make getting credit difficult, but it is still possible. As long as you have steady income and can prove you're able to repay the loan, you may be able to get one.
Bankruptcy loans are generally offered by payday lenders. You may be able to borrow between $150 and $5,000. The fees and interest rates tend to be high, while repayment periods are usually short. You may also have limited options as there are few lenders who offer this type of loan.
Depending on the type of loan you opt for, you may also be required to provide an asset as security. For instance, if you are applying for a car loan, the collateral will be your car. This is to give the lender something to fall back on in case you're unable to make your repayments.
You could also be asked to make your application with a guarantor. A guarantor is someone who agrees to pay your loan in case you can't make your repayments.
According to the Bankruptcy Act of 1996, you'll also have to disclose your status as a debtor if you want to borrow large amounts of credit. This rule applies for loans higher than $6,717. This amount is updated quarterly, so make sure you keep a tab on it.
How do I get a bankruptcy loan?
For bad credit loans like bankruptcy loans, lenders generally look at other factors apart from your credit score. This includes your current income. Lenders will look into whether you can repay the loan and if you can afford it in the first place.
To qualify for a personal loan while bankrupt, or after being discharged, you'll need some form of income. Lenders generally have a minimum threshold, around $300 dollars a week. This income can be from Centrelink payments, but it'll have to be less than 50% of your total income.
You will also need to be over the age of 18, and an Australian citizen or permanent resident to qualify for a loan.
If your application is successful, making your payments on time can help improve your credit score. Staying on top of your repayments can also improve your ability to get credit in the future.
You must keep in mind that these loans are also expensive. They come with high interest rates and fees, and shorter repayment periods. This may only complicate and add to your current financial difficulties. You should, therefore, only apply for a loan if you absolutely need it and only during financial emergencies.
Every credit application and rejection is recorded on your credit report. This can directly affect your credit score. If you apply to many lenders, it could downgrade your score. Select a lender who is able to give you terms that suit your cash flow and ability to repay the loan. If your application is rejected, you could apply again in 6 months if your situation has improved, but it is best to consult a financial adviser before doing so.
What kind of bankruptcy loans are available?
If you're currently bankrupt and in need of financing, or if you have bankruptcy listed on your credit report, these types of loans may be available to you:
These are short-term loans of up to $2,000, with repayment terms between 16 days and 1 year. The maximum loan amount is usually up to $5,000, but there may also be loans available for up to $10,000. Lenders have a flexible lending criteria, and while not all payday lenders consider bankrupt applicants, some do. These loans typically come with high fees and charges, and have shorter repayment periods than other loans.
If you have a good history with your current bank, they may be willing to approve you for a small personal overdraft. This is a line of credit which you can add to an everyday transaction account, with set limitations on the amount you can receive. It can be accessed once you've used up your available funds, and you will have to pay interest on the amount you use. You may also incur fees to set it up.
Some lenders also offer personal loans for bad credit applicants, and you may be able to get one for a larger amount. However, compared to other personal loans, the rate of interest and fees will be higher for bad credit applicants, and there will be other restrictions in place too.
You may be able to apply for a business loan, even if you're bankrupt. These loans are larger, some for amounts up to $500,000, and are designed to finance a range of business purposes.
If you have bad credit, you may be able to take out a bad credit car loan. As with other secured car loans, you could use the newly purchased vehicle as security. It may be easier to be approved for a secured loan than for an unsecured loan, as using the car as security reduces the lender's risk.
How will lenders judge my bankruptcy loan application?
Each lender has their individual eligibility criteria, but for the most part, lenders look into these aspects when considering you for a bankruptcy loan:
Ability to manage your repayments. This is the main requirement lenders take into account when considering you for a loan. If you want to take out a bankruptcy loan, your income must allow you to manage with ease not merely your loan repayments, but also your liabilities and other debts. If you are able to do this and meet the lender's other criteria, you could proceed with the application, although there is still no guarantee it will be approved.
Employment. Each lender will have their individual requirements and restrictions regarding a borrower's employment, so it is best if you check the lender's restrictions to determine if you're eligible. Your employment may, for instance, need to be regular and ongoing, and you may not be considered for a bankruptcy loan if you're self-employed or working part-time.
Income. Lenders generally have minimum income requirements and may have limits on income from benefits. Depending on the lender, this income may be from both employment and Centrelink, or income solely from regular employment. However, you will need to earn more than a certain amount per week or month to be considered for a bankruptcy loan.
Centrelink. While you may be considered eligible 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%).
Assets. For bankruptcy loans, the lender may require you to secure an asset to the loan as a guarantee in case you default on the loan.
Guarantor. If you don't meet the lender's criteria, or if you do not have assets to use as security, you may be able to apply with a guarantor to increase your chances of being approved.
What should I look out for when applying for a bankruptcy loan?
If you are taking out a bankruptcy loan, you should keep an eye out for:
Disreputable lenders. With fewer lenders willing to offer a loan, you will have fewer loan options. As a result, you may risk running into disreputable lenders. To avoid this, check if your lender is on ASIC's list of unlicensed companies. Don't deal with them if they are on this list. If they're not, look them up on ASIC's professional register. You should only deal with licensed lenders. If they are not on either list, the lender is unknown and unlicensed, and you shouldn't do business with them. You should also ensure the lender is easily contactable via phone, email or in-branch.
Interest rates and fees. Your interest rates are likely to be quite high, but that is not the only variable to consider when comparing lenders. You should also note other fees, such as establishment and monthly fees. This means that your loan will always cost more than the interest rate. You should also be wary of lenders quoting prices for establishment and monthly fees beyond the legal maximum amount. For loans of $2,000 or less, the maximum establishment fee is 20%, while the monthly fee is 4%. For loans between $2,001 to $5,000, the establishment fee is capped at $400, while the maximum interest rate is 48% p.a. of the loan amount. Additionally, make a note of late payments fees and charges if you fail to repay your loan, and include these in your decision to take out a loan.
Long-term repercussions and legal issues. Once you have signed the loan agreement, you will be bound to its conditions until the loan in its entirety has been paid. In the case of unsecured loans, the lender can take legal action against you if you cannot repay the loan. You will need to assess the consequences of this on your current financial situation.
Unaffordable repayments. When taking out a bankruptcy loan, you should consider how much you owe in regular repayments, whether it is an achievable target and whether you can afford it. If you do not repay the loan during the loan term, which can be short, there will be additional fees involved. Keep in mind that repayment periods for these loans are generally shorter than regular loans. Bankruptcy could also have tied up your available assets and income. If you wish to calculate what your repayments will cost, you can use Finder's simple personal loan calculator.
Multiple applications. Every loan application you make will be included in your credit report. While some lenders may not consider your credit history, if you make several applications within a short period, it will show on your credit report and can have a negative impact on your credit score.
Which lenders consider bankrupt or discharged bankrupt applicants?
Calculate how much you can afford to borrow. You should take into consideration the fees, interest rate and repayment terms.
Start comparing lenders and loan products. Include interest rates, fees and terms in your comparison.
Select lender. Select a lender which gives you the best rates and terms that suit your cash flow.
Organise and prepare the required documentation. This can include proof of identification, income and bank statements.
Apply for a loan. Most lenders have online applications. These loans are generally easy to apply for. Approval times are also fast. You will be notified by the lender.
Schedule your repayments. Make sure you pay on time. Most lenders will ask for direct debit payments, so make sure you have the money in your account. You can be charged a default fee if you miss a payment or fail to pay. You can be charged up to 200% of what you borrowed.
Frequently Asked Questions about bankruptcy loans
Bankruptcy lasts for 3 years, but it can be extended. Bankruptcy also stays on your credit report for typically two years after it was discharged but potentially up to 5 years, depending on how long you were bankrupt for.
Your bankruptcy ends if it has been annulled or if you've been discharged.
Annulment. This is when your bankruptcy has been cancelled. It 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.
Discharged. If you declare yourself bankrupt, you will be due for discharge 3 years and 1 day after you filed your petition and statement of affairs. If you become bankrupt by a sequestration order, you will be due for discharge 3 years and 1 day after your statement of affairs was accepted.
After your bankruptcy period has ended, it is marked in public records as officially discharged. However it will still exist in these records for up to 5 years, and in some cases even longer.
This doesn't stop you from taking out a loan, however lenders will look at your credit history before approving you for a personal loan. Even having a discharged bankruptcy could mean your application gets rejected or you receive a higher interest rate.
You can take out a loan while under a debt agreement, also known as a part IX or part 9 debt agreement. However, lenders will see you as a riskier borrower so your loan will be expensive. If you do take out a loan, ensure you meet your repayments to help build up your credit score.
Your bankruptcy is listed on credit reporting agencies' records for 5 years from the date you became bankrupt or 2 years from your date of discharge.
Your name will appear on the National Personal Insolvency Index (NPII) as a discharged bankrupt after the end of your bankruptcy. This information is publicly available and will always be on your file. Anyone can pay a fee to conduct a search of the NPII. This can include creditors and journalists.
You are legally required to disclose your bankruptcy if you're applying for a loan over a certain amount. This amount changes twice a year based on inflation, and is currently $6,717 as of June 2023. Lenders can still check your credit history and can see any defaults or bankruptcies.
While you can apply for a loan to pay for your holiday, overseas travel will be restricted if you're currently bankrupt. You will need to apply to your trustee for permission to travel overseas.
Elizabeth Barry is the lead editor for Finder. She has over 10 years' experience writing about a range of topics with a focus on personal finance. You’ll find her writing and commentary in a range of publications and media including Seven News, the ABC, MSN, the Irish Times and Singapore Business Review.
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Hi currently locked into a part 9 dept agreement I’m paying $400+ a fortnight as I’ve had to hire a car as I’ve got 3 young children and need to get them to school each day as we have no public transport and no one will give me a loan what are my options urgent
Thanks
If you haven’t already, contact the National Debt Helpline as they may be able to help you find a way forward with a car loan: https://ndh.org.au/debt-solutions/
Hi im currently bankrupt it started may last year im in need to get a loan $2500 for my dental expenses and some bills too im working at the moment but still under probation how can i apply for loan or is there a way where can i get a loan in a week?
The page we are on offers a selection of lenders that you could approach and inquire about applying for a personal loan. Please note that most lenders will require you to have a guarantor in case you do not meet the requirements necessary to take out the loan on your own. Kindly review and compare your options on the table displaying the available providers. Once you have chosen a particular provider, you may then click on the “Go to site” button and you will be redirected to the provider’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. Hope this helps!
I’m currently in a part 9 agreement with less than 18 months left of 5 years.
I’m desperately trying to get finance for some new household appliances as my current ones are on their last legs.
I work full time and have a decent amount of my wage left over cover any repayments. However, I can’t seem to get a loan from anyone.
Thanks for getting in touch with Finder. I’m sorry to hear about your situation.
Upon checking, I could see that you are in the right place. Have you tried the lenders listed above? You can compare your options based on maximum loan amount, term of loan, and cost, to name a few. You can then click on the “Go to site” green button to be redirected to their website where you can start your application or get more information.
Please make sure that you’ve read the relevant T&Cs or PDS of the loan products before making a decision. Moreover, check the eligibility requirements as well and consider whether the product is right for you.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
I need a debt consolidation loan for a total of approx. $8000 to reduce my fortnightly/monthly repayments and I am a discharged bankrupt. I am not currently in arrears and all my current payments are up to date. What is available for me?
You can also check the table above that lets you compare lenders based on the term of loan, costs, and fortnightly payment, to name a few. However, please note that the maximum loan amount for the lenders listed above is only $2,000. The higher the amount you try to borrow, the harder it is for you to get approved. As this might be the case, you might still want to give them a try.
Please make sure that you’ve read the relevant T&Cs or PDS of the loan products before making a decision. Moreover, check the eligibility requirements as well and consider whether the product is right for you.
I hope this helps. Should you have further questions, please don’t hesitate to reach out again.
Looking to apply for $2400 loan for workplace
re-training to gain employment. Currently unemployed
and Part 9 active participant, yet to start receiving payments from centrelink. I have a fully operational car worth $7500 to put as security. Is this a possibility or will i be wasting my time? Thanks, Paul.
finder provides guidelines as well as articles like this to help users who are currently seeking loans while in bankruptcy or unemployed. You may want to check the panel of lenders that are on this page to assess your eligibility in taking out a loan through them. There are lenders who assist users who are currently a Part 9 active participant like your self. Hope this helps!
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Do you really need a loan today?*
Hi currently locked into a part 9 dept agreement I’m paying $400+ a fortnight as I’ve had to hire a car as I’ve got 3 young children and need to get them to school each day as we have no public transport and no one will give me a loan what are my options urgent
Thanks
Hi Carley,
If you haven’t already, contact the National Debt Helpline as they may be able to help you find a way forward with a car loan:
https://ndh.org.au/debt-solutions/
Best of luck!
Hi im currently bankrupt it started may last year im in need to get a loan $2500 for my dental expenses and some bills too im working at the moment but still under probation how can i apply for loan or is there a way where can i get a loan in a week?
Hi Francis,
Thank you for reaching out to Finder.
The page we are on offers a selection of lenders that you could approach and inquire about applying for a personal loan. Please note that most lenders will require you to have a guarantor in case you do not meet the requirements necessary to take out the loan on your own. Kindly review and compare your options on the table displaying the available providers. Once you have chosen a particular provider, you may then click on the “Go to site” button and you will be redirected to the provider’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. Hope this helps!
Cheers,
Reggie
I’m currently in a part 9 agreement with less than 18 months left of 5 years.
I’m desperately trying to get finance for some new household appliances as my current ones are on their last legs.
I work full time and have a decent amount of my wage left over cover any repayments. However, I can’t seem to get a loan from anyone.
Hi Rebecca,
Thanks for getting in touch with Finder. I’m sorry to hear about your situation.
Upon checking, I could see that you are in the right place. Have you tried the lenders listed above? You can compare your options based on maximum loan amount, term of loan, and cost, to name a few. You can then click on the “Go to site” green button to be redirected to their website where you can start your application or get more information.
Please make sure that you’ve read the relevant T&Cs or PDS of the loan products before making a decision. Moreover, check the eligibility requirements as well and consider whether the product is right for you.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua
I need a debt consolidation loan for a total of approx. $8000 to reduce my fortnightly/monthly repayments and I am a discharged bankrupt. I am not currently in arrears and all my current payments are up to date. What is available for me?
Hi Ray,
Thanks for getting in touch with Finder. I understand you want to consolidate your loan.
As a discharged bankrupt, you can still apply for a loan. However, you might have limited options and lenders might charge you higher interest rates.
You may refer to your options to consolidate your loan debts.
You can also check the table above that lets you compare lenders based on the term of loan, costs, and fortnightly payment, to name a few. However, please note that the maximum loan amount for the lenders listed above is only $2,000. The higher the amount you try to borrow, the harder it is for you to get approved. As this might be the case, you might still want to give them a try.
Please make sure that you’ve read the relevant T&Cs or PDS of the loan products before making a decision. Moreover, check the eligibility requirements as well and consider whether the product is right for you.
I hope this helps. Should you have further questions, please don’t hesitate to reach out again.
Have a wonderful day!
Cheers,
Joshua
Looking to apply for $2400 loan for workplace
re-training to gain employment. Currently unemployed
and Part 9 active participant, yet to start receiving payments from centrelink. I have a fully operational car worth $7500 to put as security. Is this a possibility or will i be wasting my time? Thanks, Paul.
Hi Paul,
Thank you for reaching out to finder.
finder provides guidelines as well as articles like this to help users who are currently seeking loans while in bankruptcy or unemployed. You may want to check the panel of lenders that are on this page to assess your eligibility in taking out a loan through them. There are lenders who assist users who are currently a Part 9 active participant like your self. Hope this helps!
Cheers,
Reggie