In short
While you are bankrupt or in a debt relief order (DRO), car finance is very unlikely, and it is a criminal offence to borrow £500 or more without telling the lender. After discharge, or once the DRO has ended, finance becomes more realistic, particularly a year or more on with clean conduct since. Bankruptcy and DROs stay on your credit file for six years.
While you are bankrupt
Bankruptcy normally lasts 12 months, after which you are automatically discharged. Until then:
- The £500 rule. It is a criminal offence to get credit of £500 or more without telling the lender you are bankrupt.
- Lenders almost always decline. Very few, if any, mainstream or specialist car finance lenders will lend to an undischarged bankrupt.
- Income payments. If you have an income payments agreement or order, part of your income goes to your creditors for up to three years, which leaves less room for a car payment even after discharge.
If a restrictions order or undertaking has been made, the restrictions can last from 2 to 15 years, and lenders will see that.
While you are in a debt relief order
A DRO normally lasts 12 months. The same £500 rule applies: you must tell a lender about the DRO before borrowing £500 or more. A DRO is only granted when you have very little spare income each month, so a new car payment is rarely affordable during one. If your circumstances change while the DRO is running, you must tell the Official Receiver.
After discharge, or once the DRO has ended
This is where it becomes more realistic. The entry stays on your credit file for six years from the date of the order, but lenders look at the whole picture:
- Time since discharge. A year or more with clean conduct since makes a real difference.
- How you have managed money since. Bills, a bank account and any small credit paid on time.
- Stability. Steady income, a settled address and being on the electoral roll.
- Affordability. A modest car on a payment that comfortably fits your budget.
Some lenders on our panel consider discharged bankrupts, particularly a year or more after discharge. We look at your circumstances first and tell you honestly whether any lender is likely to consider you, after a DRO or bankruptcy, before anything is submitted. Finance is always subject to status, affordability and lender approval.
How long it shows
| Bankruptcy | Debt relief order | |
|---|---|---|
| Usually lasts | 12 months until discharge | 12 months |
| Credit file | 6 years from the bankruptcy date | 6 years from the date of the DRO |
| Insolvency Register | Removed 3 months after discharge, unless restrictions apply | Removed 3 months after the DRO ends, unless restrictions apply |
| Borrowing £500 or more | Must tell the lender while undischarged | Must tell the lender while the DRO is running |
Rebuilding before you apply
- Register on the electoral roll at your current address.
- Keep a basic bank account running smoothly, with no unarranged overdraft.
- Pay every bill on time, including mobile phone and utilities, as these show on your file.
- Check your credit file is accurate once the order has ended. See how to check your credit file for free.
- Avoid lots of applications close together, as each hard search is visible to lenders.
Free debt advice
If you are still dealing with debts, free and impartial advice is available from MoneyHelper, StepChange, National Debtline and Citizens Advice. They can explain your options, including whether bankruptcy or a DRO is right for you.
Finance is subject to status, affordability and lender approval. Over 18s, UK residents only. This guide is general information, not personal financial advice. We are a credit broker, not a lender.