There’s no doubt that bankruptcy isn’t the most desirable situation to be confronting. There are some serious financial consequences involved and it’s a very demanding and stressful process that will affect you financially for a couple of years to come. Ending up in mountains of debt can happen in a heartbeat, and many individuals find themselves in this situation due to a wide variety of factors. Not having the opportunity to work resulting from illness is one of the most frequent reasons individuals file for bankruptcy. It’s not like they had any control over the situation, but being unable to pay off their debts due to the fact that they have no income is the hard reality they need to face. As a matter of fact, 7,900 individuals in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people may think. In my opinion, bankruptcy is neither good nor bad. Certainly, those who file for bankruptcy have made some bad financial decisions and will punished as necessary, nonetheless filing for bankruptcy is also the first step to financial freedom. Lots of folks struggle for years just to make ends meet, while their debts keep compounding, so in many cases, bankruptcy is an opportunity for a clean slate for those people that are unable to repay their debts.
While I’ve never been bankrupt myself, I’ve witnessed the journey of many individuals who have and surprisingly, most people are better off and glad they went through the process. If you’re enduring financial problems and thinking about bankruptcy, this article will summarise what life is like after you file for bankruptcy.
You Will Not Be Debt Free By Declaring Bankruptcy
Bankruptcy is very complicated, and there is a common misconception that all debts are removed by declaring bankruptcy. This is certainly not the case. There are various debts that won’t be removed, for example Centrelink debts, HECS debts, child support, court imposed fines (for instance speeding tickets), and money that is owed to an insurance company arising from a car accident where you were uninsured and at fault. Alternatively, filing for bankruptcy will clear debts such as credit cards, GST and tax, and unsecured personal loans. The reality is, you will still have debts to pay after you declare bankruptcy, but the most serious debts in most cases, such as credit cards, will be cleared.
Feelings Of Remorse And Embarrassment Are Standard
Bankruptcy is a taxing process and lots of people who declare bankruptcy have feelings of remorse and embarrassment; as if they’ve lost in life. This is normal, however it’s imperative to overcome these emotions because the reality is, humans make errors, and bankruptcy is a way that you can start a new beginning financially and get your life back on track. The sooner you recover from these feelings of embarrassment, the sooner you’ll be able to begin the recovery process and craft a plan of how you’re going to repay your outstanding debts and rebuild your credit report. Always remember, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit report, so it’s certainly not the end of the world.
You Can’t Borrow Any Money For Three Years
Unfortunately, by declaring bankruptcy you won’t be able to borrow any money under any circumstances for three years. During this time, it’s necessary that you start rebuilding your credit report by maintaining a stable income and paying your bills and outstanding debts on time. It’s simple but effective. After this three-year process, you become a discharged bankrupt and will have the option to acquire 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 advisable to obtain 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 option to receive all sorts of loans again at competitive rates.
Life after filing for bankruptcy clearly isn’t easy, but the emotional relief that most individuals experience after beginning the process certainly softens the blow. There are some heavy financial repercussions 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 coping with financial hardship, 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 challenging, but it’s also not the end of the world. If you ‘d like to speak with someone about your financial predicament, get in touch with Bankruptcy Experts Tweed Coast on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: http://www.bankruptcyexpertstweedcoast.com.au