|August 3, 2017||Comments Closed|
There’s no doubt that bankruptcy isn’t the most desirable situation to be confronting. There are some major financial consequences involved and it’s a very difficult and stressful process that will affect you financially for years to come. Ending up in mountains of debt can transpire very rapidly, and many people find themselves in this situation due to a multitude of factors. Not having the ability to work due to illness is one of the most frequent reasons individuals declare bankruptcy. It’s not as if they had any control over the situation, but being unable to pay off their debts considering that they have no income is the hard reality they must face. In fact, 7,900 individuals in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as uncommon 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 bad financial decisions and will punished as necessary, nonetheless declaring bankruptcy is also the first step to financial freedom. Some folks struggle for years just to make ends meet, whilst their debts keep compounding, so in many cases, bankruptcy is an opportunity for a clean slate for individuals 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 went through the process. If you’re encountering financial distress and thinking about bankruptcy, this article will summarise what life is like after you file for bankruptcy.
You Will Not Be Debt Free By Filing For Bankruptcy
Bankruptcy is considerably complicated, and there is a standard misconception that all debts are eliminated by declaring bankruptcy. This is definitely not the case. There are various debts that won’t be cleared, such as Centrelink debts, HECS debts, child support, court imposed fines (like speeding tickets), and money that is owed to an insurance provider arising from a car accident where you were uninsured and in the wrong. On the other hand, declaring bankruptcy will eliminate debts like 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 significant debts in most cases, such as credit cards, will be removed.
Feelings Of Regret And Shame Are Normal
Bankruptcy is a taxing process and most people who file for bankruptcy have feelings of guilt and shame; as if they’ve lost in life. This is natural, however it’s paramount to overcome these emotions because the fact is, humans make mistakes, 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 guilt, the sooner you’ll be able to begin the recovery process and develop a plan of how you’re going to repay your outstanding debts and rebuild your credit report. Remember, 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 vital that you start rebuilding your credit rating 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 chance to receive loans for secured assets like houses and cars, but your interest rates will be much higher because of your poor credit report. Whilst it’s not always appropriate to attain 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 option to receive all forms of loans again at competitive rates.
Life after filing for bankruptcy obviously isn’t easy, but the emotional relief that most people experience after starting the process certainly softens the blow. There are some substantial 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 dealing 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’re afraid of 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 predicament, contact Bankruptcy Experts Bendigo on 1300 795 575 for a confidential discussion, or alternatively visit their website for additional information: www.bankruptcyexpertsbendigo.com.au