How Long Does Bankruptcy Last & How Many Years Will It Affect my Credit Rating?

For those considering bankruptcy, it’s important to fully understand exactly how it will affect your life going forward.

One of the biggest concerns people have regarding bankruptcy is the length of time it will last and how it will affect their credit rating. Generally speaking, you will be bankrupt for 3 years however there are two different periods of bankruptcy; the undischarged period(3 years) and the discharged period (2 years).

During the undischarged period, certain restrictions will be imposed in accordance with the Bankruptcy Act. Firstly, if your income exceeds a certain limit, you may be required to make contributions from your income. The amount that you must contribute will be determined by the amount of debt and your income. During your term of bankruptcy, you cannot be a director of and/or manage a company. Some professional/licensing bodies have the power to restrict or prevent you from continuing in that trade or profession and may not be able to hold certain public positions. Whilst you are bankrupt you will also be prohibited from managing a company, without the permission of a court.

During the discharged period, no restrictions apply which means that the period of bankruptcy has finished and the person is no longer an undischarged bankrupt. This usually occurs automatically, three years and one day after the bankrupt’s statement of affairs is accepted, although the period of bankruptcy can be extended.

Your bankruptcy will go on a government file known as the NPII. It is from here that the credit rating company, VEDA, gets the information and are allowed to hold the details on your file for 7 years.

For more information or help regarding bankruptcy, contact our specialists at Bankruptcy Debt Help today.