What effect will Bankruptcy have on your credit rating?

We receive a lot of calls from the public asking, What effect will Bankruptcy have on your credit rating?

Information about a bankruptcy stays on record for at least six years and a bankruptcy restrictions order can remain there for as long as 15 years. Lenders see these and mark you down when scoring your credit application, because they fear you may not honour your obligations to them if you have failed with others in the past.

Credit reference agencies keep information about an individual. The Official Receiver does not send notice of the bankruptcy order to credit reference agencies, but they usually find out through the advertisement of the bankruptcy order and it will be recorded on your file. Many lenders use a credit scoring method based on the information provided to them and held by a credit reference agency. Further information is available in a leaflet called ‘Credit explained’ available from the Office of the Information Commissioner

www.informationcommissioner.gov.uk
tel: 08453 091 091

How is my address affected by bankruptcy?

When a bankruptcy order is made, details of the bankrupt are advertised, including addresses at which he currently lives and trades, and previous such addresses. As a result, a bankruptcy order may become associated with an address, and if you live at such an address, you may experience difficulties in obtaining credit. This is because it may be assumed that you are the bankrupt with which the address is associated. However, you have the right to inspect information held by credit reference agencies and have any incorrect information changed. Further information is available in a leaflet called ‘Credit explained’ available from the Office of the Information Commissioner

www.informationcommissioner.gov.uk
tel: 08453 091 091

How can I get the land charges entries removed?

When a bankruptcy order is made, it is recorded in the Land Charges Register held by Land Registry, and the entry lasts 5 years. When you are discharged from bankruptcy, you can apply to the court to have the land charges entries removed. Please note that the land charges entries are not the same as a bankruptcy restriction or Form J restriction, which are entries in the Land Registry against specific properties - these cannot be removed until the Trustee in bankruptcy has realised his interest in the property or the property re-vests, in which case the trustee should have applied for the re-vesting to be shown on the register.

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Frequently Asked Questions on credit rating

1. People who are currently bankrupt

On my credit reference file there is a default for a debt which was included in my bankruptcy. Is this right?
Yes. If a debt has been included in your bankruptcy, the creditor should have marked the account in default. The default will stay on your credit reference file for 6 years from the date of the default. After you have been discharged from your bankruptcy you can send proof of your discharge to everyone included in your Statement of Affairs. Those people whose debts were included in your bankruptcy should then mark the entry on your credit reference file to show that you no longer owe money on that account (perhaps by marking the entry as ‘satisfied’ or ‘settled’ or in some other way). However, the default will not be removed from your credit reference file until 6 years from the date of default. If you wish, you can ask the credit reference agency to add a statement called a ‘Notice of Correction’ to the default entry. In your statement, you may like to say that the entry was included in your bankruptcy. More information about ‘Notices of Correction’ can be found in the ‘Credit Explained’ publication.

I’ve noticed that a debt that was included in my bankruptcy is marked in default later than my bankruptcy. Can I do anything to change it?
Sometimes a creditor will not know the exact date you were made bankrupt. This may mean that when the creditor registers a default with the credit reference agencies, the date on the default is later than the date on your Bankruptcy Order.

If a particular debt is included in your Statement of Affairs at the time of your bankruptcy, you can ask the creditor to change the date of the default to the date on your Bankruptcy Order. To do this, you should write to the creditor and ask them to change the default date to the date of the Bankruptcy Order.

Remember to send the lender a copy of your Bankruptcy Order or other documentation which confirms the date you were declared bankrupt.

If the lender refuses to change the date of the default then you can write to: Information Commissioner, Wycliffe House, Water Lane, Wilmslow, Cheshire, SK9 5AF. You will need to send them a copy of the Bankruptcy Order/ documentation that confirms the date you were made bankrupt, proof that the debt in question was included in your bankruptcy and a copy of the lender’s letter which says it won’t change the date of the default.

2. People who have been discharged from bankruptcy

Why doesn’t my credit reference file show that my bankruptcy has been discharged?
The credit reference agencies will not know when your bankruptcy was discharged unless you paid the Official Receiver to publicly advertise your discharge from bankruptcy.

If you didn’t ask the Official Receiver to advertise your discharge and you want it to be recorded on your credit reference file, you will need to send confirmation of your discharge (e.g. documentation from the Court or Official Receiver) to each of the credit reference agencies and ask them to update your credit reference file.

The bankruptcy entry will remain on your credit reference file for 6 years from the date of the Bankruptcy Order even if you have been discharged and have told the credit reference agencies. Those people whose debts were included in your bankruptcy should then mark the entry on your credit reference file to show that you no longer owe money on that account (perhaps by marking the entry as ‘satisfied’ or ‘settled’ or in some other way). However, after 6 years, the credit reference agencies will automatically remove the bankruptcy entry from your credit reference file.

My credit reference file shows that my bankruptcy has been discharged. But shouldn’t the credit reference agency have removed the record of my bankruptcy?
Even if you have been discharged from bankruptcy, the record of your bankruptcy will stay on your credit reference file for 6 years from the date of the Bankruptcy Order.

What happens to the defaulted accounts on my credit reference file?
When you have been discharged from bankruptcy you can ask the creditors to mark any debts included in your bankruptcy as ‘satisfied’ or ‘settled’ or to indicate in another way that you have fulfilled your obligations to that creditor.

You will need to write to all the creditors who were included in your Statement of Affairs and provide them with proof of your discharge from bankruptcy before the creditor will be able to change the information it files on your credit reference file record.

Once the creditor has changed the information on the entry, if you make any new credit applications the prospective lender will be able to see that you do not owe any more money on that account.

Finally, if you wish, you can ask the credit reference agency to add a statement called a ‘Notice of Correction’ to the default entry. In your statement, you may like to say that the entry was included in your bankruptcy. More information about ‘Notices of Correction’ is in the ‘Credit Explained’ booklet.

3. People whose bankruptcy has been annulled

My bankruptcy has been annulled. What will happen to my credit reference file?
If your bankruptcy has been annulled but the annulment was not advertised publicly, you will need to send proof of the annulment to the credit reference agencies. The credit reference agencies should then update your credit reference file so that the bankruptcy entry shows that the bankruptcy has been annulled.

If the bankruptcy should never have been made, the credit reference agency should remove all reference to the bankruptcy from your credit reference file. In any other case, the bankruptcy entry should show that it has been annulled.

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The Enterprise Act 2002

Although The Enterprise Act 2002 has reduced the length of time for an automatic discharge, these changes do not alter the length of time your bankruptcy is on your credit reference file which continues to be 6 years from the date of your bankruptcy.

Obtaining a copy of your credit reference file

You can get a copy of your credit reference file from the credit reference agencies listed below:

• Callcredit Plc, Consumer Services Team, PO Box 491, Leeds LS3 1WZ
• Equifax Plc, Credit File Advice Centre, PO Box 1140, Bradford BD1 5US
• Experian Ltd, Consumer Help Service, PO Box 8000, Nottingham NG80 7WF

You will need to write to the credit reference agencies and give:

• your full name,
• your current address,
• any other addresses you have lived at in the past six years
• a cheque or postal order for £2.00 made payable to Equifax Plc, Experian Ltd or CallCredit Plc.

Unless the credit reference agency needs more information from you, it has 7 working days from receipt of your request for your file to supply your credit reference file.

What is bankruptcy? | Bankruptcy explained | The bankruptcy process | The effects of bankruptcy | The disadvantages of bankruptcy | How do I petition for my own bankruptcy? | What happens after bankruptcy? | What are the alternatives to bankruptcy?| Can my bankruptcy be reversed? | Can my bankruptcy be cancelled? | New legislation - the Enterprise Act 2002? | Frequently asked questions | Bankruptcy additional facts | Personal Bankuptcy | Bankruptcy Records | Bankruptcy Advice | What happens when you visit the Official Receiver's Office? | What happens to my home in bankruptcy? | What happens to my pension in bankruptcy? | When will my bankruptcy end? | How am I made Bankrupt? | Where is the Bankruptcy Order made? | Who will deal with my bankruptcy? | Who do I need to tell if I go bankrupt? | What are your duties as a bankrupt? | What effect will Bankruptcy have on your credit rating? | Payment to your creditors in Bankruptcy | What happens to your assets in bankruptcy? | What is a bankruptcy restriction notice? | What is a form J restriction? | What happens in bankruptcy if I rent my house? | What happens to your life assurance policy in bankruptcy? | What happens to your business in bankruptcy? | What happens to your wages in bankruptcy? | What are bankruptcy restrictions orders and undertaking? | Debts you have incurred after you have been made Bankrupt | What are the advantages of going Bankrupt? | What are the disadvantages of going Bankrupt? | What are the implications of  Bankruptcy? | Jersey - a guide to Bankruptcy Law | Bankruptcy Law | Student Loans and Bankruptcy | Bankruptcy Forms | Avoid Bankruptcy | Business Bankruptcy | Accountant in Bankruptcy |