About us: Based in Cardiff, CoverBuilder is a new company specialising in home insurance for those who are unable to get a competitive premium, have been turned down at renewal or refused insurance elsewhere. We provide for a wide area of specialist situations, with a heavy focus on insurance for those with criminal convictions or poor credit history.
Escaping your debt – it’s only the beginning.
The glorious day arrives. That final payment to your debtors is processed and cleared and after months (or sometimes years) of hard graft to reach this point, you are finally back in the black. Debt free and ready to go on with your life.
Yet your previous financial difficulties can have an impact long beyond the discharge of an agreement and remain a persistent shadow against your name. 3 years down the line that credit card application could well be turned down due to your previous bankruptcy. In fact, the long-term consequence of having experienced debt is something that can reoccur, often in situations that you may never have considered.
The bankruptcy option
Previous bankruptcies stay on your credit file for 6 years after their settlement and can still have a big impact during this period. There are obvious implications such as a reduced access to credit and mainstream bank accounts but there are more obscure difficulties too that might not have been considered.
Bankruptcies and job prospects
A previous bankruptcy and failure to pay back credit may mean you find it more difficult to get a job in certain industries in the future, such as the civil service, the police or a security firm. This reduction in your employment opportunities can seem daunting at first but doesn’t need to send you into a spin. Most future employers will not even need to be made aware of your previous bankruptcy and there will usually be some leniency in the ones that do, particularly if a bankruptcy has been discharged or a debt settled. And luckily, companies such as Citizens Advice are on hand to give free, impartial advice to anyone who is concerned about their employment opportunities after debt.
A poor credit history can also impact your ability to access other services such as car and home insurance. Many ‘main brand’ providers will, at best, restrict the ability to pay monthly for your cover, but you could find that you are denied cover altogether regardless of payment method. Insurers often perceive those who belong to this category as a higher financial and moral risk due to their history of not being able to pay back borrowed money.
You should always disclose any previous bankruptcies or CCJs to your insurer. Failure to do so can lead to future claims you make being turned down because you have not fully disclosed your situation when purchasing the policy.
However, you needn’t panic – even, if your insurer is unable to continue your cover as a result of your credit history, there are specialist insurers who will be able to cover you. One example, CoverBuilder, continue to offer full cover and payment terms to customers who have a variety of financial history situations from IVAs through to bankruptcy.
A growing problem
The number of people becoming insolvent across England and Wales leapt by a fifth in the third quarter of 2016, indicating that the number of people who are being adversely affected by their credit history is likely to continue growing. The result is service providers and employers will be missing opportunities if they fail to adopt more flexible approaches to people with an adverse credit history.
It should not be forgotten that taking the decision to go bankrupt can often lift the enormous pressure of a life in debt, which can have a huge detrimental impact on your family life and mental health (one in four people with mental health issues is also in debt). Therefore, although there may be some drawbacks, bankruptcy is still a hugely positive thing for many people. With many service providers slowly softening their stances, and specialists out there that are happy to help, life after bankruptcy can definitely offer the blue skies it promised.