There’s no doubt that bankruptcy isn’t the ideal scenario to be facing. There are some drastic financial consequences involved and it’s a very intricate and stressful process that will affect you financially for years to come. Finding yourself in mountains of debt can happen in a heartbeat, and many individuals find themselves in this situation due to a number of factors. Not having the opportunity to work due to illness is one of the most common reasons why people file for bankruptcy. It’s not like they had any control over the situation, but being unable to settle their debts since they have no income is the hard reality they will have to face. In truth, 7,900 people in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as rare as some people may believe. If you ask me, I think that bankruptcy is neither good nor bad. Of course, those who declare bankruptcy have made some poor financial decisions and will reprimanded appropriately, however filing for bankruptcy is also the first step to financial freedom. A great deal of individuals struggle for years just to make ends meet, whilst their debts keep worsening, so in a lot of cases, bankruptcy is a chance for a clean slate for individuals that are unable to repay their debts.
While I’ve never been bankrupt personally, I’ve witnessed the journey of lots of people who have and surprisingly, lots of people are better off and glad they underwent the process. If you’re enduring financial problems and contemplating bankruptcy, this post will explain what life is like after you file for bankruptcy.
You Won’t Be Completely Debt Free By Declaring Bankruptcy
Bankruptcy is pretty complicated, and there is a frequent misconception that all debts are cleared by declaring bankruptcy. This is definitely not the case. There are numerous debts that won’t be eliminated, including Centrelink debts, HECS debts, child support, court imposed fines (such as speeding tickets), and money that is owed to an insurance company arising from a car accident where you were uninsured and liable. Alternatively, declaring bankruptcy will remove debts such as credit cards, GST and tax, and unsecured personal loans. The fact is, you will still have debts to pay after you file for bankruptcy, but the most serious debts in many cases, such as credit cards, will be eliminated.
Feelings Of Regret And Shame Are Standard
Bankruptcy is a stressful process and lots of people who declare bankruptcy have feelings of guilt and shame; as if they’ve lost in life. This is standard, however it’s critical to overcome these emotions because the truth is, humans make errors, and bankruptcy is a way that you can go back to square one financially and get your life back on the right track. The sooner you recover from these feelings of remorse, the sooner you’ll be able to start the recovery process and craft a plan of how you’re going to repay your remaining debts and rebuild your credit rating. Bear in mind, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit history, so it’s definitely not the end of the world.
You Can’t Borrow Any Money For Three Years
Unfortunately, by filing for bankruptcy you won’t be able to borrow any money under any circumstances for three years. During this time, it’s essential that you start rebuilding your credit history by maintaining a regular income and paying your bills and remaining debts on time. It’s simple but effective. After this three-year process, you become a discharged bankrupt and will have the option to attain loans for secured assets like houses and cars, but your interest rates will be much higher as a result of your poor credit report. Whilst it’s not always suggested to attain loans straight away, it is possible. After seven years from the time you became bankrupt, your credit report will be clean, and you will have the chance to secure all kinds of loans again at competitive rates.
Life after declaring bankruptcy obviously isn’t easy, but the emotional relief that most individuals experience after starting the process definitely softens the blow. There are some significant financial implications involved, but filing for bankruptcy is the first step towards financial freedom and securing a bright future for you and your family. If you’re dealing with financial difficulties, it’s always best to seek professional advice sooner rather than later. Whatever you do, don’t keep battling financially for years because you fear the stigma linked with bankruptcy. It’s difficult, but it’s also not the end of the world. If you ‘d like to talk with someone about your financial condition, get in touch with Bankruptcy Experts Taree on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: www.bankruptcyexpertstaree.com.au