There’s no question that bankruptcy isn’t a desirable scenario to be grappling with. There are some serious financial repercussions involved and it’s a very challenging and stressful process that will affect you financially for years to come. Ending up in mountains of debt can happen very rapidly, and lots of people end up in this situation because of a multitude of factors. Not having the opportunity to work resulting from illness is one of the most common reasons why individuals file for bankruptcy. It’s not like they had any control over the circumstances, but being unable to pay off their debts since they have no income is the hard reality they must face. In fact, 7,900 individuals in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as uncommon as some people may think. If you ask me, I think that bankruptcy is neither good nor bad. Certainly, those who declare bankruptcy have made some bad financial decisions and will punished as necessary, nonetheless declaring 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 most cases, bankruptcy is a chance for a fresh start for those that are unable to repay their debts.
Even though I’ve never been bankrupt myself, I’ve witnessed the journey of many people who have and surprisingly, many people are better off and glad they underwent the process. If you’re enduring financial distress and thinking about bankruptcy, this article will outline what life is like after you file for bankruptcy.
You Will Not Be Completely Debt Free By Filing For Bankruptcy
Bankruptcy is relatively complicated, and there is a standard misconception that all debts are removed by declaring bankruptcy. This is definitely not the case. There are various sorts of debts that won’t be cleared, for example Centrelink debts, HECS debts, child support, court imposed fines (for instance speeding tickets), as well as money that is owed to an insurance provider arising from a car accident where you were uninsured and in the wrong. On the contrary, filing for bankruptcy will clear debts like credit cards, GST and tax, and unsecured personal loans. The fact is, you will still have debts to pay after you declare bankruptcy, but the most significant debts in many cases, such as credit cards, will be cleared.
Feelings Of Remorse And Shame Are Natural
Bankruptcy is a stressful process and most people who file for bankruptcy have feelings of guilt and embarrassment; as if they’ve lost in life. This is natural, however it’s vital to overcome these emotions because the truth is, humans make mistakes, and bankruptcy is a way that you can make a fresh start financially and get your life back on track. The sooner you recover from these feelings of embarrassment, the sooner you’ll be able to start the recovery process and work out a plan of how you’re going to repay your remaining debts and rebuild your credit history. Don’t forget, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit report, so it’s definitely 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 imperative that you start rebuilding your credit rating by maintaining a regular 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 bad credit rating. Though it’s not always sensible to acquire 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 opportunity to obtain all sorts of loans again at competitive rates.
Life after filing for bankruptcy clearly isn’t easy, but the emotional relief that many people experience after starting the process certainly softens the blow. There are some considerable financial penalties involved, but declaring bankruptcy is the first step towards financial freedom and securing a bright future for you and your family. If you’re confronting financial difficulties, it’s always best to seek professional advice sooner rather than later. Whatever you do, don’t keep struggling financially for years because you’re afraid of the stigma linked with bankruptcy. It’s challenging, but it’s also not the end of the world. If you ‘d like to talk to someone about your financial circumstances, contact Bankruptcy Experts Dandenong on 1300 795 575 for a confidential discussion, or alternatively visit their website for more details: http://www.bankruptcyexpertsdandenong.com.au