Last updated:
February 8, 2024
Written by
Claire Fürst

Car Finance After Bankruptcy or a DRO

Understanding car finance options in the UK is really important for people who have gone through bankruptcy or a Debt Relief Order (DRO). This guide aims to clarify your options, with a focus on solutions offered by Ozoomi post-bankruptcy or DRO.

Car Finance After Bankruptcy

Understanding Bankruptcy

Bankruptcy is a legal measure for clearing unpayable debts.

When you're bankrupt, your non-essential assets (property and what you own) and excess income are used to pay off your creditors (people you owe money to).  

Bankruptcy lasts for 12 months and impacts your credit file for 6 years, which will impact car finance quotations. 

For a complete understanding of bankruptcy and its consequences, refer to the Government guides on bankruptcy (England and Wales: GOV.UK Bankruptcy, Scotland: AIB.GOV.UK Bankruptcy, Northern Ireland: NI.GOV.UK Bankruptcy) and the Money Advice Service (Money Advice Service on Bankruptcy).

Car finance is unattainable during active bankruptcy due to legal and risk-related restrictions imposed by lenders.

Securing Car Finance Post-Bankruptcy

After discharge of bankruptcy, some specialist companies are available to offer car finance, even with the bankruptcy mark on your credit file. Here at Ozoomi, we have a great network of lenders who have experience with people who have gone through the bankruptcy process. 

Although there may be a more limited number of offers for car finance post-bankruptcy, it still remains possible for you to get car finance.

Car Finance After A Debt Relief Order (DRO)

Understanding DRO

A Debt Relief Order, or DRO, is an option for those unable to repay debts, freezing certain debts for 12 months and then writing them off, subject to specific eligibility criteria:

  • Your total debt is below £30,000.
  • You have limited disposable income, typically under £75 monthly.
  • You are not a homeowner.
  • You’ve lived or worked in England or Wales in the last 3 years.
  • Your assets (the things that you own) aren’t worth more than £2,000 in total (you can also own a car with a value of up to £2,000).

With a DRO in place, you can expect to:

  • Pause payments toward your debts, including interest, for a duration of 12 months.
  • Adhere to specific regulations ('restrictions') throughout this period.

For more information on Debt Relief Orders, refer to the government website GOV.UK DRO.

A Debt Relief Order lasts for 12 months and stays on your credit file for 6 years, which will impact your car finance quotations. 

Similarly to active bankruptcy, it is not possible to get car finance during an active DRO due to risk-related and legal restrictions of the lending companies.

Seeking Car Finance After A DRO

There are specialist firms who can provide car finance options once the DRO is resolved, even though it is still visible on your credit history.

Ozoomi has links to lenders who are experts in circumstances where an individual has gone Debt Relief Orders. It is never guaranteed for anyone to get an offer for car finance, but Ozoomi is optimistic that it has the connections that will give everyone their best chance at getting a finance agreement that works for them. 

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