Bankruptcy is not a decision that should be taken lightly. There are some harsh financial implications involved and your financial freedom will be restrained for years to come. This doesn’t mean that declaring bankruptcy is the end of the world though. It should really be regarded as the first step in securing a bright financial future for you and your family. Millions of people file for bankruptcy each year and many of them have the ability to buy homes, cars and acquire credit cards after they’re discharged. Along with this, understanding what life is like after you have filed for bankruptcy will not surprisingly give you insight into making better financial decisions in the future.
In a nutshell, once you have filed for bankruptcy, you hand over control of your finances and assets to a Trustee for protection against legal proceeding that may be taken by your creditors. Once the legal process has been completed, you’ll be undischarged for a certain period of time (in most cases 3 years) after which time you’ll become discharged, which means that the financial constraints you sustained during bankruptcy are lifted. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article aims to achieve is to give you an understanding of what happens after you declare bankruptcy and what options you’ll have after you become discharged.
You Can’t Leave The Country Without Permission
One of the disadvantages of declaring bankruptcy is that you cannot exit the country while you’re undischarged only if you seek permission from your Trustee. To do this, you’ll have to provide a lot of details regarding your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel overseas without prior consent from your bankruptcy Trustee, and in many cases will increase the duration of your undischarged bankruptcy to a minimum of five years rather than three.
You Will Be Offered Credit Right Away
One thing that surprises a lot of discharged bankrupts is that they will immediately be offered credit by a large range of lending institutions. The main reason behind this is that you won’t be able to file for bankruptcy again for a lengthy period of time, so creditors understand that they have a good chance of getting their money back if you secure a loan. Sometimes, securing a loan and making timely repayments will help strengthen your credit score, which will help you in the recovery process. But be wary, you don’t want to take every offer thrown in your direction as some financial institutions are very dubious and include hidden fees and charges that can put you in debt again immediately. The key is to rebuild your credit record slowly.
Buying A Home Is Certainly Possible
There’s a regular misconception that when you declare bankruptcy, you will no longer be able to acquire credit for a home loan. This is definitely not the case. Though bankruptcy will leave you with a bad credit score, you can still purchase a home if you have the capacity to rebuild your credit within a few years, you pay all your bills in a timely manner, and you display a responsible use of credit. Of course, you won’t have the capacity to get a home loan straight after you’re discharged, so it’s paramount to build your credit history wisely before even thinking of securing a mortgage.
Check Your Credit Frequently
Most financial specialists advise that discharged bankrupts should take a look at their credit report at least twice a year. After initially declaring bankruptcy though, it’s critical that you check your credit report monthly for at least the first six months into your bankruptcy. A few creditors may still be requesting payments even though you are not required to make payments on any debts that were discharged in the bankruptcy process. So to avoid any further difficulties, it’s necessary that you keep track of your credit report to make sure it’s correct and up to date.
Although bankruptcy isn’t the ideal position to be in, it doesn’t mean that your financial future is permanently limited. There are some serious financial restraints imposed on people that file for bankruptcy, but after they become discharged and slowly rebuild their credit history, they’re completely capable of securing a bright financial future. Acquiring home loans and other credit lines will be possible a few years after discharge if the recovery process is well-planned and executed. Therefore, it’s paramount that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is very complicated and there are many factors to need to be taken into account to ensure a smooth recovery process. If you’re thinking about declaring bankruptcy, get in touch with Bankruptcy Experts Taree on 1300 795 575 or visit their website for additional information: www.bankruptcyexpertstaree.com.au