Bankruptcy is not a decision that should be taken lightly. There are some severe financial consequences involved and your financial freedom will be confined for years to come. This doesn’t indicate that declaring bankruptcy is the end of the world though. It should actually be thought of as the first step in securing a bright financial future for you and your family. Millions of people file for bankruptcy every year and most of them have the ability to buy homes, cars and attain credit cards after they’re discharged. Further to this, understanding what life is like after you have declared bankruptcy will naturally give you insight into making better financial decisions in the future.
In simple terms, once you have declared bankruptcy, you give up control of your finances and assets to a Trustee for protection against litigation that could be taken by your creditors. Once the legal process has been completed, you’ll be undischarged for a certain period of time (in most cases three years) after which time you’ll become discharged, which means that the financial restraints 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 file for bankruptcy and what options you’ll have after you become discharged.
You Can’t Leave The Country Without Permission
One of the drawbacks of declaring bankruptcy is that you can’t leave the country while you’re undischarged only if you request permission from your Trustee. To do this, you’ll need to provide a lot of details regarding your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel to another country without prior permission from your bankruptcy Trustee, and in most cases will increase the duration of your undischarged bankruptcy to at least five years instead of three.
You Will Be Offered Credit Instantly
One thing that surprises plenty of discharged bankrupts is that they will immediately be offered credit by a large range of lending institutions. The main reason behind this is that you won’t have the ability to file for bankruptcy again for a lengthy period of time, so lenders understand that they have a good chance of getting their money back if you secure a loan. In some situations, securing a loan and making timely repayments will help strengthen your credit history, which will assist you in the recovery process. But be cautious, 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 history steadily.
Buying A Home Is Definitely Possible
There’s a popular misconception that once you declare bankruptcy, you will no longer be able to secure credit for a home loan. This is definitely not the case. While bankruptcy will leave you with a bad credit rating, you can still purchase a home if you have the capacity to rebuild your credit within a few years, you pay all your bills on time, and you exhibit a responsible use of credit. Of course, you won’t have the ability to get a mortgage straight after you’re discharged, so it’s very important to build your credit rating sensibly before even contemplating securing a home loan.
Check Your Credit Regularly
Most financial specialists recommend that discharged bankrupts should take a look at their credit report around twice a year. After initially filing for bankruptcy though, it’s crucial that you check your credit report each month for at least the first 6 months into your bankruptcy. Several creditors may still be requesting payments even though you are not required to make payments on any debts that were discharged in the bankruptcy process. So to avoid any further difficulties, it’s pressing that you monitor your credit report to ensure it’s correct and up to date.
Whilst bankruptcy isn’t the preferred situation to be in, it doesn’t mean that your financial future is permanently constrained. There are some severe financial constraints imposed on individuals that file for bankruptcy, but after they become discharged and slowly rebuild their credit score, 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. Thus, it’s paramount 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 considered to ensure a smooth recovery process. If you’re thinking of declaring bankruptcy, phone Bankruptcy Experts Coffs Harbour on 1300 795 575 or visit their website for more information: www.bankruptcyexpertscoffsharbour.com.au