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How bankruptcy affects me

Bankruptcy and my credit rating

Bankruptcy will remain on your credit file for at least six years. If you go bankrupt, your credit file will be affected and you may find it difficult to get any further credit, loans or a mortgage.

The rules around debt relief orders (DRO) have changed. These changes could benefit those considering an insolvency solution like bankruptcy. Please take a look at the changes, as for some people a DRO will be a cheaper alternative to full bankruptcy.

Your credit file holds information about credit you’ve taken out in the past six years. If you want to take out a loan, lenders can access your credit file to see if you’ve defaulted on accounts or made late payments to them. This helps them understand if you’ll be able to pay back the money you want to borrow.

Although bankruptcy usually only lasts for 12 months your bankruptcy will remain on your credit file for six years, starting from the date your bankruptcy begins. This means you might find it difficult to get credit during this time.

After bankruptcy you can improve your credit score by using credit sensibly. Find out more about credit scores.

If you try to get a mortgage, or rent a new home, during bankruptcy, you may struggle as your mortgage provider or landlord will often perform a credit check. They may also ask if you’ve been bankrupt in the past.

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How long will bankruptcy appear on my credit file?

Your bankruptcy will appear on your credit file for six years from the date you became bankrupt.

Although bankruptcy only lasts a year, the accounts you had will still appear on your credit file for six years since it originally defaulted.

The default date on all accounts must be set no later than the date of your bankruptcy. This means all the debts you had before the bankruptcy order will disappear six years later. If any lenders have set the default date on your credit file after your bankruptcy order, complain to them and ask them to correct it.

The exception to this is if your official receiver decides you’ve acted negligently or dishonestly before or during your bankruptcy. They can set a ‘bankruptcy restriction undertaking’ (BRU) or order (BRO) which extends your bankruptcy restrictions for up to 15 years. If this happens, the bankruptcy will remain on your credit file until the BRU or BRO ends. Extending restrictions beyond six years is not common though.

Can you get credit during bankruptcy?

If you go bankrupt, you can’t take out credit over £500 during the first 12 months of your bankruptcy without informing the lender that you’re bankrupt. This means most lenders will either refuse you credit or charge a higher rate of interest.

As bankruptcy stays on your credit file for six years, you may find it difficult to get credit after bankruptcy too.