Credit Repair After Bankruptcy – Can You Fix Your Credit File After Being Bankrupt?

Information verified correct on May 25th, 2016
Credit Repair After Bankruptcy

Bankruptcy does not have to mean the end of the world; you can still take measures to get your creditworthiness back on track.

Bankruptcy in Australia is not uncommon, with around 25,000 to 30,000 individuals filing for bankruptcy every year. If you’ve filed for bankruptcy on your own, or if the proceedings are the result of a lender you owe money to, the end result is pretty much the same.

The good thing is there are measures you can employ to repair your credit even after a court ruling declares you bankrupt, but what you have to bear in mind is that this cannot happen overnight, and requires some effort on your part.

How does bankruptcy occur?

If there comes in a point in your life when you can no longer keep up with repaying your debts, you can file for bankruptcy voluntarily. A creditor you owe more than $2,000 to can also initiate bankruptcy proceedings against you when you stop making repayments. A creditor can initiate these proceedings in a the Federal Court or the Federal Circuit Court using a Creditor’s Petition, and you get a copy of this petition that, amongst other things, tells you when you have to attend court. At the hearing, you have the following options:

  • You agree to bankruptcy
  • You don’t agree to bankruptcy and explain why
  • You ask for an adjournment because you need additional time.

What happens while you’re bankrupt?

If you agree to become bankrupt, you have to inform the registrar or the judge at the hearing of the same, and once the registrar or the judge checks the creditor’s petition for correctness, they will pass a sequestration order declaring your bankruptcy. It normally takes three years from the date of the bankruptcy filing for it to end. Once you file for bankruptcy, you remain protected from any further action that you creditors might want to take.

What is the aftermath of bankruptcy?

The bankruptcy listing remains on your credit file for two years from the annulment date, or five years from the beginning of the bankruptcy – whichever comes later. During the three years of bankruptcy, the possibility of getting any kind of unsecured credit remains very slim, be it through a credit card, a loan, or a line of credit. Since you won’t be able to get any financing during this period, you can use the time to start saving some money, which can work to your benefit when the bankruptcy ends.

Your credit file will show a bankruptcy listing for five years starting from the day your bankruptcy began or 2 years from the date of annulment, whichever is later.

How can you repair your credit rating?

After your credit file is free of the bankruptcy listing you can move forward with repairing your credit. A steady income works in your favour, as does building on the assets you own. Building healthy spending habits is crucial as well, and you should definitely refrain from making impulse purchases.

repairing your credit file

Since repairing credit is not an overnight process, it is important that you start slow, or you could end up getting frustrated. Remember that you should not apply for too many credit offerings at or around the same time because creditors would view this negatively.

In the beginning, you might only qualify for a credit card with a low credit limit and a high interest rate. In such a scenario, ensure making timely payments, and try not to miss a single payment. If you keep this up, getting a credit card with a lower interest rate should not be too far off, and you can see the positive effects of your financial habits on your credit file by this time.

Showing a probable creditor that you have built on savings over time is another way towards approval, and if you have a term-deposit you can even consider getting a secured loan against it. Repaying this loan in a timely manner would also have a positive effect on your creditworthiness.

You may need to enlist the services of a credit repair specialist to clear any incorrect bad marks on your credit file, but ensure to research these companies thoroughly before accepting their offers.

How can you maintain good credit after credit repair?

Going through bankruptcy even once can be quite a daunting task, and it is only natural that no one wants an encore. Once you get out of bankruptcy it is important that you employ new spending habits and start paying due attention to your finances. Making a budget and sticking to it is a good place to start.

There could be several expenses that you might have to trim down on to make sure that your expenses don’t exceed your income. If you feel ill-equipped to handle the situation on your own, seeking assistance from a financial counsellor or planner is not out of place.

Going through your credit file is a good idea, as you might end up spotting mistakes that need rectification, and these changes would work in your favour. Once you get new credit cards and loans, make sure you keep paying them in a timely manner. Putting some money aside in a savings account on an ongoing basis can work in getting you a secured loan from your local bank at a short notice.

What are the types of cards available after declaring bankruptcy?

    • Low income credit card. Such a card comes with a low minimum income requirement, and would offer little in terms of features.
  • Low credit limitsLow credit limit cards are ones that you can consider applying for once you start getting back on track in terms of spending and saving. The low credit limit would ensure that you don’t spend beyond your means, but you might have to pay a high interest rate.
  • Low interest ratesGetting a low interest card soon after you get out of bankruptcy is not easy, and you’ll have better luck getting one is after you begin demonstrating an ability to make timely repayments towards a low income or low credit limit card.
  • Joint accountOne way to get a credit card after your bankruptcy ends is to do so with someone who has a good credit history, which you can do through a joint application. In such a scenario, you stand a better chance of approval if the person with good credit history is the primary applicant.There are lenders that allow more than one primary account holder.

Things to be wary of

  • Avoid temptation to apply. There is no lack of credit card providers who spend large amounts of money in advertising, with the sole aim of getting more applicants, and the temptation to apply for multiple cards can get the better off you.
  • Spending patterns. Your spending pattern, in all likelihood, has a big role to play in your bankruptcy, so be wary of your spending getting back to the old pattern. If you see this happening, take remedial measures immediately.
  • Bankruptcy does not clear you of all liabilities. If you think bankruptcy will free you from all your liabilities, think again. Bankruptcy does not discharge fraudulent debts, it does not discharge child support debts, it does not clear HECS/HELP debts, and it does not discharge un-liquidated debts.

What are the pros and cons of declaring bankruptcy?


  • No more dealing with unsecured creditors. You don’t have to worry about being harassed by any of your unsecured creditors, and these creditors can no longer proceed with legal action to recover their money through courts.
  • Protect some assets. Even when you go bankrupt, you get to hang on to most household goods, ordinary clothing, tools of your trade, life insurance and endowment policies, superannuation that you haven’t accessed before bankruptcy, and compensation payments received for personal injury.


  • Effect on creditworthiness. The bankruptcy ruling stays on your credit file for while, and during this period getting any kind of credit is near impossible.
  • Name on National Personal Insolvency Index. Once you file for bankruptcy, your name remains on the National Personal Insolvency Index (NPII) for life.

Going through bankruptcy is not an easy process, and is often the last option for many. If you’ve been through bankruptcy, take heart in knowing that not all is lost, and you can get your finances in order again as long as you’re willing to work towards it over time.

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Frequently asked questions

When I go bankrupt can the creditor continue to demand payment and will I still have to pay the debt after my bankruptcy ends?

The type of debt will dictate whether creditors can continue to demand payment and whether you will still be required to pay the debt after the bankruptcy period has ended.

Refer to the AFSA Bankruptcy and debt agreements – debt comparison table for more information: click here.

If I file for bankruptcy, do I have to face travel restrictions?

Yes. While you can travel anywhere in Australia, to travel overseas you have to seek permission from your trustee.

I have some equity in real estate; will bankruptcy affect it in any way?

Any interest that you have in real estate becomes a part of the estate that your trustee is to administer. This includes inheritances, gifts, and winnings.

Does going bankrupt affect my ability to get insurance?

You can have trouble in getting the insurance you desire, but this essentially depends on the terms and conditions of any given insurance policy.

What effect does my income have on my being bankrupt?

If your after-tax income is over the bankruptcy threshold, you would have to make contributions from the same towards the bankruptcy.

Does bankruptcy affect my ability to get telecommunications connections?

It can. Certain telecommunications providers might offer you no more than local calls until you establish a good payment history, which could take up to six months.

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128 Responses to Credit Repair After Bankruptcy – Can You Fix Your Credit File After Being Bankrupt?

  1. Default Gravatar
    Roni | May 5, 2016

    I had a bad debt from a couple of service provider due to my financial situation back in 2011 and I’m willing to repay them but I was wondering even if I repay them, will the record still be on the file to apply for the loan from the bank to start up my own business? Any advice and suggestion would be appreciated.

    Many thanks.

    • Staff
      May | May 6, 2016

      Hi Roni,

      Thanks for reaching out.

      Most lenders will check your credit file when you apply for a new line of credit, say you apply for a loan for your business. Therefore, it is wise and important that you make your credit file healthy and in good standing to be assured of approval for your loan application. Since you have mentioned that you have had a bad credit history, you’d be best if you settle your previous debt first by making on-time repayments.

      Keep in mind though that your credit file will hold your repayment history information for 2 years. Credit enquiries, overdue accounts as clearouts and defaults and also court judgements remain on your file for five years. Meanwhile, overdue accounts listed as serious credit infringements remain on your file for seven years.


  2. Default Gravatar
    joe | April 18, 2016

    I went bankrupt about 8 years ago, I just wanted to be able to get a loan. How do I get back on my feet with this or it is not possible ever again?

    • Staff
      May | April 18, 2016

      Hi Joe,

      Thanks for getting in touch.

      Once you get out of bankruptcy, you’d be best if you learn how to manage your new spending habits and handle your finances carefully. On this page, you can find invaluable information and tips on getting your life back again after dealing and declaring personal bankruptcy.

      I hope this is helpful.


  3. Default Gravatar
    Jeannie | March 1, 2016

    If I have a credit card debt that I cannot pay can they take my car of me ? it is 6 years old and I owe it out right.
    Many thanks.

    • Staff
      Jonathan | March 2, 2016

      Hi Jeannie, thanks for your inquiry!

      If your debt is significant, there is no stopping a card issuer from initiating proceedings to repossess some of your assets or even push you towards bankruptcy. You may like to consider transferring your existing credit card debt to a balance transfer credit card and repay your debt with 0% interest.



  4. Default Gravatar
    steve | February 22, 2016

    Hi there, was discharged from bankruptcy on 26/3/2014. does that mean that after the 26/3/16 bankruptcy will be off m,y credit report? i am looking to re finance home loan for better rate with mainstream lender (bank) will i have a better chance then.

    • Staff
      Jonathan | February 23, 2016

      Hi Steve, thank for your inquiry!

      The bankruptcy listing remains on your credit file for two years from the annulment date, or five years from the beginning of the bankruptcy – whichever comes later. You may like to refer to our guide on improving your credit score here.



  5. Default Gravatar
    susan | November 10, 2015

    i went bankrupt 2008 will it be of my credit vile

    • Staff
      Jonathan | November 10, 2015

      Hi Susan, thanks for your inquiry!

      The bankruptcy listing remains on your credit file for two years from the annulment date, or five years from the beginning of the bankruptcy – whichever comes later. As a result it should have been removed from your credit file now.



  6. Default Gravatar
    Karlz0000 | October 8, 2015

    I’m wondering if I can move state in Australia. I’m in NSW and I’m looking to Move to VIC. Am I able to once I’ve declared bankruptcy?

    • Staff
      Sally | October 9, 2015

      Hi Kartz0000,

      Thanks for your inquiry.

      While there’s nothing stopping you from moving interstate, it is ideal that you file for bankruptcy and repay all your debts first in order to keep the debt collectors from hounding you and to protect your assets from repossession when you leave.

      However, do take note that bankruptcy may have a long lasting effect on your credit file for at least 5 years or even longer. This may affect your credibility and reputation, employment opportunities, and chances of securing credit again.

      To help you bounce back from bankruptcy, you might want to check our “Credit Repair After Bankruptcy – Can You Fix Your Credit File After Being Bankrupt?” page here.

      For more information on bankruptcy, you may also check our Facts Everyone Should Know About Bankruptcy and How to Deal with Credit Card Debt Collectors pages.

      I hope this has helped.



  7. Default Gravatar
    ethan | August 1, 2015

    hi i am discharged bankrupt for 6 months i voluntary went bankrupt how can i rebuild my credit rating i have a phone contract with opt-us i always pay on time i have a take home lay bye i always pay on time i have had a couple of small cash loans and all have been paid in full i have a income from my pension and i am working part time cheers

    • Staff
      Jonathan | August 3, 2015

      Hi Ethan,

      Thanks for your question.

      Please refer to the following link for a guide on how to repair your credit rating.

      l hope this has been helpful.



  8. Default Gravatar
    Nick | July 21, 2015

    To start I was never given the option to attend court. They put me in bankruptcy. I now have the money to pay all fees charges they are asking for 100,000 dollars. They say they will give me an annulment on receiving this money. My question is does this bankruptcy say on my credit file? also why should it if I have paid this amount in full. Can I go to court and clear my credit file as there is no outstanding debt. Regards.

    • Staff
      Sally | July 22, 2015

      Hi Nick,

      Thanks for your inquiry.

      Information about bankruptcy will appear on your credit file for seven years.

      If your creditor declared you bankrupt, and initiated these bankruptcy proceedings in a Federal Court or the Federal circuit using a Creditor’s Petition, the creditor will give you a copy of the petition which mentions the time and date when you have to attend the court. At the hearing, you may opt to:
      a) agree to bankruptcy
      b) disagree to bankruptcy and explain why, and
      c) ask for an adjournment because you need additional time.

      You may want to check this page for further information regarding credit reports and credit files.

      I hope this has helped.



  9. Default Gravatar
    Rhonda | July 7, 2015

    I entered a debt agreement in 2010. The last payment will be 14th September. How long will this show on my credit report after the final payment

    • Staff
      Sally | July 7, 2015

      Hi Rhonda,

      Thanks for your question.

      If you have a debt agreement, the length of time this information remains on file could vary depending upon when the debt agreement was entered into and when it will end. This can also vary according to the organisation you’re with. For example, Veda automatically delete information from your credit report on or just before its expiry date, calculated using the retention periods set out in the Privacy Act.

      I would contact your provider directly to confirm the information specific to your credit file.

      For further information, you may wish to consult our credit repair guide.

      I hope this has helped.



  10. Default Gravatar
    yvonne | July 6, 2015

    Husband’s annulment date 9/2009 (declared 6/2006) Applied for small amount credit with a company that had been part of the bankruptcy. He was told they hold information showing $300 is owed to them back in 6/2006. He was refused credit based on this, however there are no defaults,serious credit infringements or any other judgements showing on his credit report and certainly not from this company.

    Are creditors allowed to do this? Will all past creditors that were a party to his bankruptcy also retain history and refuse future credit should he apply?


    • Staff
      Jonathan | July 8, 2015

      Hi Yvonne, thanks for your inquiry!

      If a company is stating that there is a debt outstanding but your credit file does not reflect this record it would be best to rectify this issue by contacting the company’s credit department directly or seeking credit repair advice. If an amount is outstanding and has not been paid then it is the creditor’s right to refuse any further loans. Credit reporting agencies can keep a record of your bankruptcy on your credit report for up to 5 years.



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