Bankruptcy Melbourne, Insolvency Melbourne, Declaring Bankruptcy Melbourne

Even though bankruptcy has a lot of financial repercussions, it certainly doesn’t suggest the end of the world. Lots of individuals file for bankruptcy for numerous reasons, and this figure only intensifies with the difficult economic conditions that we see today. According to information from the Australian Financial Security Authority (AFSA), there were 7,466 cases of bankruptcy in Australia in the September 2014 quarter alone. Getting bankruptcy advice is necessary so you become mindful of exactly what transpires financially when you declare bankruptcy.

There are two kinds of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy signifies that you’re currently in the process of bankruptcy and are not able to secure any kind of loan. Discharged bankruptcy means that you are no longer bankrupt, and can secure a loan with several specialist lenders. Bankruptcy usually lasts for three years however can be lengthened in some instances.

Unfortunately, the banks do not list the reasons for your bankruptcy and this can make it quite difficult to get a home loan approved when you are ultimately discharged. Whether you’ll be able to purchase a home after bankruptcy relies on various factors, including the kind of loan you’re after and how you manage your credit rating once declared bankrupt. What is definite is that your spending capability will be restricted, and repossession of property is typical.

Can you get a home loan approved after bankruptcy?

There are a variety of specialist lenders offering home loans to customers that have been discharged from bankruptcy for only one day. While most of these loans feature a higher interest rate and charges, they are nevertheless an option for people that are eager. In most cases, a bigger deposit is needed and there are more stringent terms and conditions when compared to regular home loans.

There are many differences amongst lenders for discharged bankruptcy loan approvals. Some lenders will even offer discounted 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 also affect the result of your application. Two years is usually advised. Furthermore, maintaining a consistent income and employment are also details which will be considered. Most bankrupt people will also actively try to bolster their credit rating quickly to lower the hardship of bankruptcy once discharged.

Things to consider when applying for a home loan once discharged

Selecting a suitable lender is essential, so it’s a good idea to decide on a lender that not only grants loans to discharged bankrupts but one that is recognised and trustworthy. By doing this, you will feel comfortable that you are securing fair terms and conditions and your application is more likely to be approved. There are several suspicious lenders on the market that exploit the financially vulnerable, so please take care. Another valuable aspect to consider is that you should not apply to more than one lender at a time. Every loan application appears on your credit history, and multiple applications all at once are viewed negatively by lenders.

Pros and cons of home loans for discharged bankrupts


You can still a loan. Although it may be complicated, it is still possible for discharged bankrupts to get a home loan approved.

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

Your credit rating will improve. Straightforward tasks such as paying your bills on time and generating steady income will improve your credit rating.


You can’t obtain a loan until you are discharged. A lot of lenders will not approve any loans to individuals that are undischarged to avoid risking any additional financial distress.

Increased rates and fees. Typically, interest rates and fees will be increased for discharged bankruptcy loans. You can only obtain 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 be on the National Personal Insolvency Index (NPII).

Bankruptcy is never a pleasant experience, but it does not imply that you will never own a home again. Because of the intricacy of bankruptcy, it’s imperative to seek professional advice from the experts to ensure you understand the process and therefore make prudent financial decisions. For more details or to talk with someone about your circumstances, contact Bankruptcy Melbourne on 1300 879 867 or visit Declaring Bankruptcy Melbourne