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Getting a loan while bankrupt – Top 5 things you need to know

Bankruptcy can be a stressful time, which can be compounded by the restrictions it can place on your finances. If you need extra cash and are looking for a personal loan, you might have found it a tricky and often disheartening path to negotiate.   In Australia, bankruptcy lasts for three years from the date it was declared but it will stay on your credit file for five years. This means lenders can access your credit file when assessing any application for loans and could use the bankruptcy as the reason for not approving the loan.   But don’t lose hope. If you’re bankrupt and need a loan, here’s what you can do to shore up your chance of success.

1. Know your bankruptcy details

Some lenders, like Fair Go Finance, will consider a personal loan application one year after you’ve been declared bankrupt, if you don’t have any other marks against your file after the bankruptcy. Make sure you know your bankruptcy details when you’re applying for the loan.

2. Make sure you have security

If you’re applying for a car loan, a lender will ask for security if the loan is over a certain amount and this is usually the car you are buying. It could also strengthen your application with some lenders.

3. Reliable income

Proving you have a regular income is very important part of demonstrating to a potential lender that you have the capacity to repay the loan.

4. Good conduct

Showing a lender that you are low risk is important and you can do this by making sure that you’ve paid all bills since being declared bankrupt. If there are any defaults on your credit file, this will go against your loan application.   To check the status of your credit file, obtain a free copy from Equifax here.

5. Avoid repeat loan applications

Your credit file will also include details of the loans you’ve applied for, and repeat applications can be off-putting to lenders. If you are bankrupt and need a loan, do your research into the company that offer bad credit loans but don’t apply for every loan you see.

The advice provided on this website is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. 

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Are you eligible to apply?

  • I’m 18 years or older
  • I’m employed (not self-employed)
  • I’m paid $500 or more a week into my bank account
  • My income is not solely from Centrelink
  • I’ve not entered into bankruptcy or part 9 agreement within the last 12 months


It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.

Check your options before you borrow:
For more information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor.

Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan.
If you are on government benefits, ask if you can receive an advance from Centrelink.

The Australian Government’s MoneySmart Website shows you how small amount loans work and suggests other options that may help you.

* This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.