Bankruptcy is not a decision that should be taken lightly. There are some unpleasant financial implications involved and your financial freedom will be limited for several years to come. This doesn’t indicate that declaring bankruptcy is the end of the world though. It should really be considered as the first step in securing a bright financial future for you and your family. Millions of individuals file for bankruptcy each year and the majority of them have the capacity to buy homes, cars and obtain credit cards after they’re discharged. Along with this, understanding what life is like after you have declared bankruptcy will undoubtedly give you insight into making better financial decisions in the future.
Generally speaking, once you have filed for bankruptcy, you hand over control of your finances and assets to a Trustee for protection against legal action that could be taken by your creditors. Once the legal process has been finalised, you’ll be undischarged for a certain period of time (in most cases 3 years) after which time you’ll become discharged, which indicates that the financial restrictions you incurred during bankruptcy are removed. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article strives to achieve is to give you an understanding of what happens after you declare bankruptcy and what options you’ll have after you become discharged.
You Can’t Leave The Country Without Permission
One of the limitations of declaring bankruptcy is that you cannot leave the country while you’re undischarged unless you seek permission from your Trustee. To do this, you’ll have to provide a lot of information relating to your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel abroad without prior consent from your bankruptcy Trustee, and in many cases will increase the length of your undischarged bankruptcy to a minimum of five years instead of three.
You Will Be Offered Credit Right Away
One thing that surprises many discharged bankrupts is that they will immediately be offered credit by a wide range of lending institutions. The reason behind this is that you won’t be able to declare bankruptcy again for an extended period of time, so creditors understand that they have a good chance of getting their money back if you secure a loan. Occasionally, acquiring a loan and making timely repayments will help improve your credit history, which will help you in the recovery process. But be wary, you don’t want to accept every offer thrown in your direction as some lenders are very dubious and include hidden fees and charges that can put you in debt again immediately. The trick is to rebuild your credit score gradually.
Buying A Home Is Certainly Possible
There’s a general misconception that once you declare bankruptcy, you will no longer be able to acquire credit for a home loan. This is certainly not the case. Though bankruptcy will leave you with a poor credit rating, you can still buy a home if you have the ability to rebuild your credit within a few years, you pay all your bills in a timely manner, and you exhibit a responsible use of credit. Obviously, you won’t have the ability to acquire a mortgage straight after you’re discharged, so it’s vital to build your credit score sensibly before even contemplating securing a home loan.
Check Your Credit Regularly
Most financial specialists recommend that discharged bankrupts should review their credit report at the very least twice a year. After initially filing for bankruptcy though, it’s important that you check your credit report every month for at least the first six months into your bankruptcy. A few creditors may still be demanding payments despite the fact that you are not required to make payments on any debts that were discharged in the bankruptcy process. So to stay clear of any further complications, it’s pressing that you keep track of your credit report to make sure that it’s accurate and up to date.
Although bankruptcy isn’t the preferred position to be in, it doesn’t mean that your financial future is permanently restrained. There are some severe financial restraints imposed on people that file for bankruptcy, but after they become discharged and slowly rebuild their credit rating, they’re perfectly capable of securing a bright financial future. Acquiring home loans and other credit lines will be possible a couple of years after discharge if the recovery process is well-planned and executed. For this reason, it’s vital that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is considerably complicated and there are many factors to have to be taken into account to ensure a smooth recovery process. If you’re thinking about filing for bankruptcy, reach out to Bankruptcy Experts Gladstone on 1300 795 575 or visit their website for more details: www.bankruptcyexpertsgladstone.com.au