Discharged Bankruptcy Mortgage | What you need to know
If you have recently experienced bankruptcy you may be wondering what your chances are of gaining a mortgage after being discharged from bankruptcy. Below we outline everything you need to know about getting a discharged bankruptcy mortgage .
Discharged Bankruptcy Mortgage – What is bankruptcy?
Bankruptcy is when a person or a company is declared legally insolvent. The debtor’s property is then divided up between the creditors. A court can only make a bankruptcy order after a bankruptcy petition has been presented. A bankruptcy petition can be presented either by the debtor, known as a debtor’s petition or in the form of a creditor’s petition, by one or more creditors who are owed at least £750 by the debtor in the form of an unsecured loan. A bankruptcy order can still be made even if the debtor refuses to acknowledge the proceedings or refuse to agree to them.
Discharged Bankruptcy Mortgage – What is a mortgage charge and does it affect a bankruptcy case?
A charge is a claim by a creditor against some specific item of the debtor’s property. The property guarantees payment should the debtor not be able to make the required repayments. A mortgage charge allows the creditor to force the sale of your property which you have pledged in the form of a secured mortgage loan as security. The money made through the sale of the property will then be used to pay off the 
outstanding debts. Bankruptcy does not void any mortgage charges you may have against your home.
Discharged Bankruptcy Mortgage – What is a bankruptcy discharge?
The goal of a bankruptcy proceeding is to obtain a discharge of debts. When a debt is discharged, it is no longer personally enforceable against the debtor. This means that the debtor does not immediately have to pay their debts. Consequently, the creditors must notify collection agencies to prevent any further credit control action. From the point of discharge onwards the creditor must cease any kind of permanent action against the debtor. Although the debtor is relieved from any personal liability they are still accountable for the debt. They are simply given a little breathing room.
Discharged Bankruptcy Mortgage – When will I receive a bankruptcy discharge?
Being discharged from bankruptcy usually occurs after 12 months, however this is not always the case so make a note of the discharge date your mortgage adviser will need to know this. Your bankruptcy will show on your credit file for 6 years however your information will always show on the Individual Insolvency Register.
Discharged Bankruptcy Mortgage – When can I apply for a mortgage after discharged bankruptcy?
You are free to apply for borrowing facilities as soon as you are discharged from bankruptcy; unfortunately, most mortgage lenders continue to view you as a bankrupt and will decline to offer any kind of mortgage finance. There are however certain specialist lenders who will be prepared to assess your situation and will try and find reasons to provide you with a mortgage rather than try and find reasons not to lend you the money. These lenders all have waiting periods ie the time between being discharged and the time you can apply for a mortgage. These waiting periods are anything form 12 months from being discharged, up to 6 years from the date of discharge.
Alternatively there are some high Street lenders and building societies will consider lending to you if you require a discharged bankruptcy mortgage, however, this will all be based on the strength of your credit score which inevitably will be lower than if you had a perfect track record with your finances. If you do pass their credit score system the rates and deals you will generally get offered will be the same as the next man The facts are it will be tough to find the right mortgage for you and we suggest that you call us with a copy of your credit file at hand so we can give you the facts.
