Are you blacklisted if you go Bankrupt
- 03 Feb 2022
Your credit rating is blacklisted if you go bankrupt. However the property where you live and the people you live with are not affected.
Included in this article:
- How does Bankruptcy affect your credit rating?
- Is your house blacklisted?
- Will other people living with you be affected?
- How long do you remain blacklisted?
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How does Bankruptcy affect your Credit Rating?
Once you go bankrupt a record of the fact is added to your credit file. This will seriously affect your credit rating. It will mean you will no longer qualify for most forms of credit for 6 years. In this sense you are blacklisted.
Having said that, this situation is probably no worse than the one you will find yourself in anyway. If you do not maintain your agreed debt payments it is likely your creditors will issue default notices against you. These will also be recorded on your credit file for 6 years.
Once default notices are issued and recorded against you, you will be prevented from getting credit in exactly the same way as being bankrupt. The so called credit blacklisting is no different.
Bankruptcy has exactly the same effect on your credit rating as an IVA.
Is your House Blacklisted if you go Bankrupt?
A property does not have a credit rating. If you go bankrupt a record of this is added to your personal credit file. The property itself can’t be blacklisted.
Your credit file contains a record of both your current and past addresses. However this does not have any effect on the property you live in.
For this reason it is a myth that your house will be blacklisted if you go bankrupt. Your poor credit rating can’t rub off on your property.
If you move either during Bankruptcy or after the process is over your credit rating will move with you. It does not remain connected to your old address in any way.
Will Other People living with you be Blacklisted?
There is no way to identify that there is a Bankrupt person living in a property just from the address. As such your poor credit rating does not affect anyone else living in the property.
The credit rating of other people living with you will not be affected. Having said it is possible for credit reference agencies to make mistakes. It is rare but the information on your credit file can become mixed up with others living at the same address.
If someone living in the same property as you is turned down for credit they will need to check their credit file. This will show if anything has been mistakenly recorded on their file regarding your bankruptcy.
If errors are found on an individual’s credit file these can be resolved quite easily using a process called disassociation.
How long will you remain Blacklisted after Bankruptcy?
Going bankrupt does not mean that you will be blacklisted forever. However the record remains on your credit file for 6 years. As such it is likely that you will struggle to get most forms of credit during this time.
After 6 years this the record will be automatically removed from your file. Your credit rating will then start to improve again naturally.
There are various things you can do to start improving your credit rating as soon as you are discharged. However your file will not be 100% clear until the 6th year anniversary of the bankruptcy start date.
It is possible to get a mortgage after your bankruptcy is over. However you will normally have to wait until the record has come off your credit file.