Published in Debt Advice Features on Saturday, February 03 2007

Bankruptcy does not restrict anyone from obtaining credit in bankruptcy, any debt that an individual had accrued before the date of the bankruptcy order would be included into bankruptcy as a bankruptcy debt and would be administered by the bankruptcy trustee.

The only restriction of obtaining unsecured loans and other credit in bankruptcy is the way a person goes about applying for the credit.

One of the main restrictions in bankruptcy is that a person cannot obtain credit of over £500 without disclosing that they are an un-discharged bankrupt.

What this means is that is a person is borrowing money, whether that be in way of an unsecured loan or other credit and the amount of credit is less than £500, the individual is not required by law to disclose that they are bankrupt unless they are asked by the finance company or the person who is lending the money if they are or have been bankrupt in the last 6 years.

If the individual who is bankrupt is trying to obtain credit of over £500 whether that be applying for an unsecured loan or borrowing off a family member or friend, or they are purchasing goods without paying for them when delivered, there is a legal requirement for a person who is bankrupt to disclose that they are bankrupt.

If this is not followed then the un-discharged bankrupt could find themselves being subject to a bankruptcy restriction order, as they have not followed their duties as an un-discharged bankrupt.

One thing is that although the majority of unsecured debts that are not seen as preferential debts, before the bankruptcy order will be included as a bankruptcy debt (unsecured loan, credit cards, store cards, overdrafts etc.) Any debt that has been obtained after the date of the bankruptcy order, the person would be fully liable for that debt.

If you find yourself facing bankruptcy and feel that an unsecured loan could help you then it probably wouldn’t and you could seek alternative solutions that could get you out of this situation