Settled Scenarios
Discharged bankrupt

Refinancing after bankruptcy and ATO debt

Discharged bankrupt, home loan in arrears and post-discharge tax debt, consolidated into one loan against a profitable healthcare practice.

$880k

LOAN AMOUNT

Owner Occ

Security

3

Debts Cleared

THE STORY

The file, in three parts

What the broker brought, how the credit analyst read it, and what settled

01 · The challenge

The husband was a discharged bankrupt. The couple’s owner-occupied home loan was in arrears, and after the bankruptcy ended, further ATO debt had accumulated on top of it. On paper, three separate listings, each one a hard stop for an automated assessment: the bankruptcy on the credit file, the conduct on the existing mortgage, and a growing tax debt with the practice still trading through it.

02 · How VMG assessed it

A credit analyst read the file as a sequence of events rather than a set of listings. The bankruptcy had a cause, it had been discharged, and the healthcare practice had kept trading profitably throughout. The couple had already engaged a new accountant, who had prepared a business plan and was managing their tax position. Under human underwriting, with no credit scoring and no DTI or DSR ratios, that was evidence of direction. The ATO debt was treated as a liability to be quantified and paid out, not a reason to decline.

03 · The outcome

One loan of $880,000, secured against the owner-occupied property, refinancing the existing mortgage, clearing the arrears and paying out the ATO debt in full. At settlement the couple went from three problems to a single repayment, with their financials brought back under control.

THE TURNAROUND

Before and after

The same file, before the refinance and at settlement.

BEFORE VMG

Home loan in arrears, conduct scored as a fail.
ATO balance growing with no arrangement.
Bankruptcy listing ending every automated assessment.
Three creditors, three repayment demands.

AFTER SETTLEMENT

One $880,000 loan, one repayment.
Arrears and ATO debt cleared in full.
File assessed on merit under human underwriting.
Clean conduct on a single facility to rebuild from.

💡THE VMG COMMON-SENSE ADVANTAGE

A discharged bankruptcy tells you where a borrower has been. It does not tell you whether they can repay a loan today. A credit analyst reads both.

HOW IT WAS ASSESSED

Human underwriting

Every file is read by a credit analyst, not scored by a system. There is no credit scoring, and no DTI or DSR ratio applied. The product and the terms depend on the individual file, so talk to your BDM about where a similar scenario fits.

Have a similar file?

Test the scenario with VMG credit before you lodge. VMG lends only through accredited mortgage brokers.

Related

More settled scenarios

FUTURE INCOME STREAM
Owner occupied purchase supported by PAYG salary and the remaining tranches of a business sale being paid out over five years.

$1.8m

LOAN AMOUNT

Owner Occ

SECURITY

5 years

SALE TRANCHES
LOW CREDIT SCORE
Seven loans consolidated for a borrower with a low credit score, all repayments current, after the file had been declined elsewhere.

$508k

LOAN AMOUNT

7 Loans

CONSOLIDATED

$525

MONTHLY REDUCTION
DEBT CONSOLIDATION
A tradesperson left solely responsible for eight loans after a separation, with repayments slipping as rates rose.

$552k

LOAN AMOUNT

8 loans

CONSOLIDATED

$1,290

MONTHLY REDUCTION

QUESTIONS

Frequently asked questions

Yes, with the right lender. A lender using human underwriting, such as VMG, considers discharged bankrupts and Part 9 debt agreements on merit, reading the cause, the discharge and the borrower's current position.
It can. VMG considers ATO debt as a liability to be consolidated into the new loan, supported by a current statement of account. ATO debt is not accepted on Prime Full Doc.
Arrears do not automatically end the application. The arrears balance is treated as a debt to be cleared in the refinance, and the analyst wants to understand the cause and confirm serviceability on one consolidated loan.

All applications are subject to Victorian Mortgage Group’s standard credit assessment and lending criteria. Terms, conditions, costs and charges apply. This article is general information only and does not take into account your objectives, financial situation or needs.

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