HOME INSURANCE FOR THOSE PREVIOUSLY DECLARED BANKRUPT

Written by

David Joyson

Home Insurance Expert & Customer Champion

Reviewed by

Sophie Kamkar

Content Marketing Manager

How a history of bankruptcy affects getting home insurance

When you come to buy home insurance after you have been made bankrupt in the past, even if your order has been discharged in full, you are still likely to encounter a great deal of difficulty when buying online – or even at all. Most insurers will reject your application outright.

Here at Homeprotect we’re different. Although we need to know if you (or anyone else in your household) has been declared bankrupt in the past 5 years, we aim to provide you with a competitive home insurance quote online.

Save money and avoid a credit check by paying annually for home insurance

When you buy your policy, we offer two payment options allowing you to choose whether you pay a single amount up front or monthly instalments. The monthly payment option has a transaction fee and it requires you to have a credit score check undertaken by the credit provider. So if you are currently declared bankrupt or have a history of bankruptcy, the easiest and least stressful payment method is to pay your annual premium in one go with a payment card.

Tip: It might be tempting not to tell your insurer about bankruptcy in the past, but if you omit to disclose this and you later need to make a claim, the insurer will find out about your financial history because it’s available in public records and will most likely refuse the claim and cancel your policy immediately. Being honest about your situation is the only way to be sure you have the protection you need.

UNDERSTANDING BANKRUPTCY

If you are in debt then you can apply to become bankrupt, which may be a worthwhile course of action if you have no money to repay your creditors or if repayment will take you years to complete. If you owe more than £5,000, a creditor can also apply to have you made bankrupt (whether you like it or not).

HOW BANKRUPTCY WORKS

Bankruptcy is an order issued by a court, whereby an Official Receiver is appointed to assume control over your assets and handle your creditors on your behalf. A first time bankrupt will usually have discharged their order after one year from the date it was issued, at which point any outstanding debts are usually written off, to provide a fresh start with some restrictions.

ADVANTAGES AND DISADVANTAGES OF BANKRUPTCY

Bankruptcy can be advantageous in that it relieves the pressure that creditors might apply, it also forces creditors to cease legal proceedings over any outstanding debts, though it does not necessarily prevent bailiffs from retrieving property. You’re allowed to keep certain things, such as household goods and reasonable living expenses. The freedom to make a fresh start and the possibility of having money you owe written off can be invaluable.

On the other hand, there are a number of disadvantages associated with going bankrupt, the first being that it costs a minimum of £680 to obtain a bankruptcy order, or more if you use a solicitor. Whilst in bankruptcy you are ineligible for more credit, and you may be required to sell your own home or your personal possessions. Some professions may have rules that prevent bankrupts from continuing in employment, so you may lose your income. Any businesses that you own are likely to be liquidated and your employees dismissed.

Bankruptcy cannot be kept private and will be listed publicly. It may affect your immigration status. If you don’t co-operate with the Official Receiver, or you took on debts knowing that you would not be able to repay them, then a bankruptcy restriction order could be taken out against you. A restriction order can last for 15 years and will severely restrict your financial dealings. Court fines and student loans will never be written off through bankruptcy.