Whilst bankruptcy has various financial consequences, it certainly doesn’t signify the end of the world. Lots of individuals file for bankruptcy for different reasons, and this number only grows with the difficult economic conditions that we observe today. According to information from the Australian Financial Security Authority (AFSA), there were 7,466 episodes of bankruptcy in Australia in the September 2014 quarter alone. Finding bankruptcy advice is critical so you become mindful of exactly what happens financially when you declare bankruptcy.

There are two kinds of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy implies that you’re currently in the process of bankruptcy and are incapable to acquire any type of loan. Discharged bankruptcy implies that you are no longer bankrupt, and can acquire a loan with numerous specialist lenders. Bankruptcy typically lasts for three years but can be extended in some circumstances.

Sadly, the banks do not list the reasons for your bankruptcy and this can make it very difficult to get a home loan approved when you are eventually discharged. Whether you’ll be able to buy a home after bankruptcy rests on several factors, such as the kind of loan you’re looking for and how you handle your credit rating once declared bankrupt. What’s definite is that your spending capacity will be limited, and repossession of property is normal.

Can you get a home loan approved after bankruptcy?

There are a number of specialist lenders providing home loans to borrowers that have been discharged from bankruptcy for only one day. While a lot of these loans have a higher interest rate and charges, they are nevertheless an option for people that are interested. Much of the time, a bigger deposit is required and there are more stringent terms and conditions to regular home loans.

There are plenty of differences among lenders for discharged bankruptcy loan approvals. A few lenders will even offer reduced interest rates to individuals whose finances are in good shape and who have excellent rental history, if relevant. The length of time between your discharge and loan application will additionally influence the outcome of your application. Two years is generally recommended. Furthermore, sustaining a stable income and employment are likewise matters which will be taken note of. Many bankrupt individuals will also actively try to bolster their credit rating immediately to minimise the burden of bankruptcy once discharged.

Things to consider when applying for a home loan once discharged.

Picking out an appropriate lender is very important, so it’s a good idea to decide on a lender that not only provides loans to discharged bankrupts but one that is recognised and trustworthy. By doing this, you’ll feel comfortable that you’re securing reasonable terms and conditions and your application is more likely to be approved. There are some suspicious lenders on the market that exploit the financially vulnerable, so please be careful. Another important factor to consider is that you should not apply to more than one lender simultaneously. Every loan application appears on your credit history, and several applications all at once are viewed negatively by lenders.

Pros and cons of home loans for discharged bankrupts


You can still a loan. Though it may be tough, it is still feasible for discharged bankrupts to get a home loan approved.

The longer you’ve been discharged, the easier it gets. Spending time restoring your finances shows the lenders that you are financially responsible.

Your credit rating will improve. Practical tasks like paying your bills on time and generating steady income will improve your credit rating.


You can’t acquire a loan until you are discharged. Most lenders will not approve any loans to those that are undischarged to prevent endangering any further financial distress.

Increased rates and fees. Generally, interest rates and fees will be higher for discharged bankruptcy loans. You can only receive lower interest rates with a larger deposit.

Record of bankruptcy. You will have a record of bankruptcy on your credit history for seven years after discharge, and your name will always appear on the National Personal Insolvency Index (NPII).

Bankruptcy is never a pleasant experience, but it does not indicate that you will never own a home again. Because of the complexity of bankruptcy, it’s vital to seek professional advice from the experts to ensure you understand the process and therefore make sound financial decisions. To learn more or to talk with someone about your circumstances, contact Bankruptcy Experts Dandenong on 1300 795 575 or visit http://www.bankruptcyexpertsdandenong.com.au


What Happens When You Declare Bankruptcy and Buying A Home