There’s no question that bankruptcy isn’t the most desirable situation to be grappling with. There are some harsh financial penalties involved and it’s a very intricate and stressful process that will affect you financially for a couple of years to come. Finding yourself in mountains of debt can come about in the blink of an eye, and many individuals end up in this situation because of a multitude of factors. Not being able 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 repay their debts considering that they have no income is the hard reality they have to face. In reality, 7,900 people in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as uncommon as some people think. If you ask me, I think that bankruptcy is neither good nor bad. Of course, those who declare bankruptcy have made some poor financial decisions and will punished appropriately, however filing for bankruptcy is also the first step to financial freedom. A great deal of folks struggle for years just to make ends meet, whilst their debts keep worsening, so in a lot of cases, bankruptcy is an opportunity for a clean slate for those individuals that are unable to repay their debts.
While I’ve never been bankrupt personally, I’ve witnessed the journey of many individuals who have and surprisingly, most individuals are better off and glad they went through the process. If you’re grappling with financial distress and considering bankruptcy, this article will illustrate what life is like after you file for bankruptcy.
You Will Not Be Completely Debt Free By Filing For Bankruptcy
Bankruptcy is rather complicated, and there is a typical misconception that all debts are removed by declaring bankruptcy. This is certainly not the case. There are a range of debts that won’t be removed, such as Centrelink debts, HECS debts, child support, court imposed fines (like speeding tickets), and also money that is owed to an insurance company arising from a car accident where you were uninsured and in the wrong. On the contrary, declaring bankruptcy will eliminate debts like 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 notable debts in many cases, such as credit cards, will be cleared.
Feelings Of Regret And Embarrassment Are Regular
Bankruptcy is a demanding process and lots of folks who declare bankruptcy have feelings of remorse and humiliation; as if they’ve lost in life. This is normal, however it’s imperative to overcome these emotions because the reality is, humans make mistakes, and bankruptcy is a way that you can make a fresh start 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 develop a plan of how you’re going to repay your remaining debts and rebuild your credit rating. Keep in mind, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit history, so it’s definitely 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 necessary 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 opportunity to obtain 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 appropriate to acquire loans straight away, it is possible. After seven years from the time you became bankrupt, your credit rating will be clean, and you will have the chance 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 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 encountering financial distress, 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 difficult, but it’s also not the end of the world. If you ‘d like to speak with someone about your financial predicament, get in contact with Bankruptcy Experts Gladstone on 1300 795 575 for a confidential discussion, or alternatively visit their website for more details: http://www.bankruptcyexpertsgladstone.com.au