How Long Does Bankruptcy Stay on Your Credit Report?
Bankruptcy is a solution for those who have no way to repay their debts and should only be considered after all other solutions have been looked into. When you are declared bankrupt all debts are written off and your assets may be sold to pay what you owe.
Your bankruptcy will be listed on your credit report, as well as the public insolvency register. While going through bankruptcy, you will find it very difficult to obtain credit, but it’s worth noting that it will eventually be removed from your credit report – so you can rebuild your credit score in the future.
Read on to discover how long bankruptcy stays on your credit report:
How long does bankruptcy stay on your credit report?
Bankruptcy will stay on your credit report for 6 years – this can also be extended if the bankruptcy goes on for longer than the initial period.
You’re usually in bankruptcy for 12 months, but if your income is high enough you can be asked to pay towards your debts for 3 years.
During this time, there are a number of restrictions placed upon you. For example, you are required by law to tell any lender that you are bankrupt if you are applying for credit of £500 or more. You are also unable to act as a director of a company, unless you have permission from the court.
Once the bankruptcy ends you’ll be discharged, which means you will no longer be liable for the debts involved in your bankruptcy and the restrictions will be lifted – unless the official receiver has added any restrictions.
After discharge, it will still be listed on your credit report for 6 years, from the date of your bankruptcy. When this period is over, it will no longer be viewable – but bear in mind that some lenders may still ask if you have been bankrupt in the past and you must answer truthfully.
What happens when bankruptcy is removed from my credit report?
Creditors look at your credit report when you apply for products and will be reluctant to accept you if you have bankruptcy listed on your credit report.
Once your bankruptcy has been removed, however, it should be easier for you to obtain credit again and you can also start rebuilding your credit rating sensibly with small amounts and on time repayments.
It is best to wait until your bankruptcy has been completely removed before you start applying for credit again though, to ensure you don’t impact your credit rating further.
Can I cancel my bankruptcy?
Yes, you can cancel your bankruptcy. Cancelling your bankruptcy can lift its restrictions and its impact on your credit rating sooner but you can only do this if the following reasons apply:
- All of your debts and fees for your bankruptcy have been paid in full, by a third party.
- You’ve set up an IVA (Individual Voluntary Arrangement) with your creditors instead.
- The bankruptcy shouldn’t have been set up in the first place.
Before you apply for bankruptcy, it’s a good idea to consider how long it stays on your credit report and how this will impact you, your family and even your job. There are a number of alternative debt solutions – such as an IVA or Debt Management Plan – that may be better for you, so it’s a good idea to explore these first.
Talk to a member of our expert team here at PayPlan today, for free impartial advice that can help you get back on track, point you in the right direction and living life again without worry.