There’s no doubt that bankruptcy isn’t the ideal scenario to be grappling with. There are some harsh financial implications involved and it’s a very challenging and stressful process that will affect you financially for a couple of years to come. Ending up in mountains of debt can develop faster than you think, and many people end up in this situation as a result of a wide range of factors. Not having the capacity to work resulting from illness is one of the most common reasons individuals declare bankruptcy. It’s not as if they had any control over the circumstances, but being unable to pay their debts since they have no income is the hard reality they will have to face. In truth, 7,900 individuals in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as rare as some people believe. If you ask me, I think that bankruptcy is neither good nor bad. Certainly, those who file for bankruptcy have made some poor financial decisions and will punished appropriately, however declaring bankruptcy is also the first step to financial freedom. Some individuals struggle for years just to make ends meet, while their debts keep compounding, so in most cases, bankruptcy is an opportunity for a clean slate for those people that are unable to repay their debts.
Though I’ve never been bankrupt myself, I’ve witnessed the journey of lots of individuals who have and surprisingly, the majority of people are better off and glad they went through the process. If you’re encountering financial distress and considering bankruptcy, this post will illustrate what life is like after you declare bankruptcy.
You Will Not Be Debt Free By Filing For Bankruptcy
Bankruptcy is rather complicated, and there is a general misconception that all debts are eliminated by filing for bankruptcy. This is certainly not the case. There are various sorts of debts that won’t be removed, including Centrelink debts, HECS debts, child support, court imposed fines (for example speeding tickets), as well as money that is owed to an insurance provider resulting from a car accident where you were uninsured and at fault. Conversely, 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 file for bankruptcy, but the most significant debts in most cases, such as credit cards, will be cleared.
Feelings Of Regret And Humiliation Are Regular
Bankruptcy is an arduous process and lots of people who file for bankruptcy have feelings of guilt and humiliation; as if they’ve lost in life. This is quite regular, however it’s crucial to overcome these emotions because the fact is, humans make mistakes, 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 create a plan of how you’re going to repay your outstanding debts and rebuild your credit rating. 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 filing for bankruptcy you won’t be able to borrow any money under any circumstances for three years. During this time, it’s paramount that you start rebuilding your credit report by maintaining a stable 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 secure loans for secured assets like houses and cars, but your interest rates will be much higher due to your poor credit rating. Whilst it’s not always recommended to secure loans straight away, it is possible. After seven years from the time you became bankrupt, your credit history will be clean, and you will have the opportunity to secure all kinds of loans again at competitive rates.
Life after filing for bankruptcy surely isn’t easy, but the emotional relief that many people experience after beginning the process definitely softens the blow. There are some considerable financial consequences involved, but declaring bankruptcy is the first step towards financial freedom and securing a bright future for you and your family. If you’re facing 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 associated with bankruptcy. It’s challenging, but it’s also not the end of the world. If you ‘d like to talk with someone about your financial situation, get in touch with Bankruptcy Experts Dubbo on 1300 795 575 for a confidential discussion, or alternatively visit their website for additional information: http://www.bankruptcyexpertsdubbo.com.au