Bankruptcy is a form of insolvency, a legal status that can be a way to clear debts you can’t pay. When you’re bankrupt, your assets such as any property, vehicles, any other items you own, and excess income such as savings are used to pay off your creditors, the people you owe money to. At the end of the bankruptcy, most debts are cancelled.
After you’ve been declared bankrupt, your creditors will write off your unsecured debts. Bankruptcy usually lasts for 12 months, and you’ll have many financial limitations during this time. When your bankruptcy ends, you’ll be ‘discharged’ from it.
After being discharged from your bankruptcy you may find it difficult to secure further credit as it will remain on your credit file for 6 years.
Bankruptcy is usually seen as the last resort regarding clearing your debt. If you have assets that are worth more than your debts, or if all of your regular payments are up to date and you can afford to keep paying them, bankruptcy is not likely to be the best option for you and you should seek advice from a debt charity in suitable options.
Can I get car finance after bankruptcy discharge?
Yes, it is likely you will be able to secure car finance after your bankruptcy has been discharged. If you’ve faced rejections from mainstream lenders due to credit issues, it’s worth exploring specialist car finance providers. These firms are adept at offering solutions for those who have had bad credit in the past, understanding that your financial history doesn’t define your current ability to manage car finance.
Here at Go Car Credit we have taken on customers who have been in active bankruptcy in the past and it is now discharged.
Cannot say anything bad about Go Car Credit. Jayde was amazing throughout the entire process. Even when I decided to change my mind and choose a different car after the finance had gone through. Definitely been a godsend for me as I was only recently discharged from bankruptcy.
Can I get car finance if I am bankrupt?
It is unlikely that you will be able to get car finance during an active bankruptcy. Bankruptcy will severely affect your credit rating and even specialist lenders may see you as a high risk to lend to.
Step Change Charity state that ‘until you’re discharged from your bankruptcy it’s against the law to borrow more than £500 from any lender without telling them you’re bankrupt. You don’t need to tell them if you’re borrowing less than this, but they’ll usually find out by credit-checking you.’
Here at Go Car Credit we do not take on customers who are in an active bankruptcy.
Can I keep my car if I file for bankruptcy?
The answer is dependent on your circumstances. The charity Money Advice Online state that ‘Your car or any other motor vehicle is an asset. The official receiver which their role is to assess whether you can afford repayments towards the debts and investigate your financial situation and conduct, can sell your vehicle to help pay your bankruptcy debts. You can ask the official receiver to let you keep your vehicle. The official receiver will look at all the facts before deciding whether you will be able to keep it. Each case is different.’
For your vehicle to be exempt from the bankruptcy you will need to show the official receiver that your vehicle is a necessary part of your life and you use it to meet the basic needs for you and your family, and also to get to and from work.
If the official receiver agrees that your vehicle is important for your household to carry out essential day to day activities such as getting to work or accessing school, they will review the value of your current vehicle As they may state that you will need to sell your vehicle, buy a cheaper alternative, and pay the difference to them.
If you live in England and Wales, this will usually only happen if your vehicle is worth more than £1,500, and the official receiver would normally allow you £1,000 to buy a replacement. If you live in Northern Ireland, different limits may apply.
If you have further questions regarding applying for car finance after being discharged from bankruptcy, please get in touch as one of our experienced sales agents would be happy to answer any questions you may have. Contact us on 01925 696 373.