If you are considering going into bankruptcy it is important to know how bankruptcy affects your future, namely how it will affect your credit record, and who has access to this information.
Will bankruptcy affect my credit record?
The answer is yes.
While bankruptcy provides instant release from most debts, this information will be available to credit providers to use this information to make the decision to allow you to borrow. Credit providers usually review and individuals credit report to help them to decide whether or not to lend you money, how much they should lend and sometimes can influence the interest rate they offer.
While the algorithms and methodologies used by credit providers to determine whether they will approval any credit application is unknown, it is usual practice for the lender to obtain a copy of the applicants credit report to assist them in making the decision whether to approve the application.
How long will bankruptcy be recorded on my credit record?
It is important to know that, unlike the NPII, your bankruptcy will not be recorded on your credit record forever. Credit reporting agencies keep a record of your bankruptcy for: -
- 5 years from the date you became bankrupt; or
- 2 years from when your bankruptcy ends, whichever is later.
How do I get a copy of my credit report?
There are many credit reporting agencies who will allow you to obtain a free copy of your credit report. It is important to refer to the credit reporting agencies if you believe there is information that is not correct or any other enquires.
Who will know that I am, or have been bankrupt?
The answer is anyone can access this information, but is comes at a price.
The National Personal Insolvency Index (“NPII”) is a public register which can be accessed and searched by the public for any personal insolvency matter in Australia. Your bankruptcy will permanently appear on the NPII. Information that is recorded on the NPII includes: -
- Date of Birth (if known);
- Residential Address (as disclosed on documents accepted by the Official Receiver in Bankruptcy);
- Occupation (as disclosed on documents accepted by the Official Receiver in Bankruptcy);
- Previous name and aliases (if known);
- The type of proceeding, the date it commenced and the administration number;
- The name and contact details of the trustee or administrator of the proceedings; and
- The current status of the person and/or the proceeding. For instance, it will detail whether you are discharged from bankruptcy, whether your bankruptcy was annulled or that you are an undischarged bankrupt
To complete a NPII search it will cost $15.00AUD.
If you are concerned with the information that is recorded on the NPII, you can make a request to have information suppressed under certain circumstances. This request can be made via an application made to the Australian Financial Security Authority.
Shaw Gidley are experts in restructuring, turnaround and insolvency and provide free initial advice on these matters. Please contact our offices on (02) 4908 4444 or (02) 6580 0400.