Forums / Getting Technical / Finance / Finance for un/discharged bankrupt.

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  • Profile photo of QotsaQotsaQotsaQotsa
    Member
    @qotsaqotsa
    Join Date: 2010
    Post Count: 3

    Hi all,

    This is my first post on the forum; I've recently come to this site after rereading '$1M in property in one year.'

    First some background information. I am currently studying Accounting and Financial Management at uni, I'm due to graduate in 2012. I'm also currently an undischarged bankrupt, this will change in April 2012.

    My plan is to get a job upon graduation, in an advisory capacity in an accounting firm. I  intend to save at least 10% of my income for the first year of employment and purchase my first investment property in early 2014; with a view to achieving financial independence by 2024.

    My first question is: how much of a problem will it be, that I had declared bankruptcy in the past, in regards to obtaining finance?

    Which brings me to the second question. My reasoning behind waiting so long to start investing is that I am currently bankrupt and do not believe I have a snowball's chance in hell of obtaining finance. Is this a realistic assumption?

    And lastly what can I do now to put myself in a better financial position for the future without violating the laws imposed upon undischarged bankrupts?

    Profile photo of ducksterduckster
    Participant
    @duckster
    Join Date: 2004
    Post Count: 1,674

    Where you will have a problem is with LVR normally a borrower can get a higher loan to value ratio but in your case you will have no choice but to go to either private finance or non bank lenders.

    This will require you to have a lower LVR which means more savings are needed for the deposit.

    http://www.e-mortgages.com.au/bad-credit/default.aspx

    The links below are not a recommendation but examples of this type of lending
    http://www.badcreditfinance.com.au/
    http://www.mortgage.webseo.com.au/articles/mortgage_loan_bankruptcy.php
    http://www.ownyourhome.com.au/Resources/post/Bankruptcy-Housing-Loans.aspx
    http://www.nationalmortgage.com.au/images/pdf/WINNER.pdf
    http://www.phoenixmortgages.com.au/
    http://www.loansaver.com.au/
    http://www.fundsnational.com.au/

    Profile photo of No1No1
    Member
    @no1
    Join Date: 2010
    Post Count: 22

    To the best of my knowledge it is illegal to lend to someone who is bankrupt. Whilst bankrupt you will be allowed to earn up to something like 65k p/a and have a car to the value of x. You can not enter in to a credit contract – nor can a lender offer one to you.

    It is believed that banks will not lend to someone who was once bankrupt. This is not true. Policy of the major banks is that they can not lend whilst you are bankrupt. After being discharged you can apply.

    Once discharged it is more a matter of your credit rating – e.g. If your credit report still shows defaults and judgments you will have problems however when it is clean you can go to a major bank. You will still have to declare that you were once bankrupt however if you now have a clean credit report, stable employment etc you should; be OK with a bank.

    Profile photo of QotsaQotsaQotsaQotsa
    Member
    @qotsaqotsa
    Join Date: 2010
    Post Count: 3

    Thanks for the advice guys. It looks like I should probably start saving now to get that first deposit.

    Do you think that after I had done a few deals using 'Non conforming' loan providers, I would be able to go to one of the big banks?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    If you are working in the finance industry you will have problems – it may be impossible or very difficult to gain membership to professional bodies if you have been bankrupt in the past 10 years – This used to be the case in mortgage broking and financial planning and probably with accounting too.

    If you want to borrow and cannot all you need to do is to have someone to help you out and buy in there name. Maybe some sort of trust arrangement.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of QotsaQotsaQotsaQotsa
    Member
    @qotsaqotsa
    Join Date: 2010
    Post Count: 3

    @terryw, I hadn't considered that before (The bit about not being able to get professional accreditation). Could you please point me in the direction of more information about the professional limitations of bankruptcy?

    Also, on the subject of trusts, I understand that using trusts can shield me from personal liability if something goes wrong with an asset and shield my assets if something goes wrong personally. If I was to invest through a trust, would this remove any of the limitations of being a discharged bankrupt?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    You should look up the websites of the bodies you want to join and then download app forms and see if they ask the question. I think bankruptcy may hinder any job which involves money. You could be a lawyer though!

    With trusts the ownership of an asset is legally with the trustee. So long as you were not the trustee you would be right. But you would need someone else willing to take that position (or director of the trustee company) and the risk, as they would also need to guarantee the loans of the trust.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

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