There’s no question that bankruptcy isn’t the most desirable scenario to be facing. There are some serious financial repercussions involved and it’s a very complicated and stressful process that will affect you financially for several years to come. Ending up in mountains of debt can materialise very rapidly, and many individuals find themselves in this situation due to a multitude of factors. Not having the capacity to work due to illness is one of the most common reasons why individuals declare bankruptcy. It’s not like they had any control over the situation, but being unable to pay their debts considering that they have no income is the hard reality they will have to face. In reality, 7,900 individuals in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as rare as some people think. In my opinion, bankruptcy is neither good nor bad. Yes, those who file for bankruptcy have made some bad financial decisions and will reprimanded accordingly, nevertheless declaring bankruptcy is also the first step to financial freedom. A great deal of people struggle for years just to make ends meet, whilst their debts keep multiplying, so in many cases, bankruptcy is an opportunity for a new beginning for those people that are unable to repay their debts.
While I’ve never been bankrupt myself, I’ve witnessed the journey of many individuals who have and surprisingly, most people are better off and glad they underwent the process. If you’re grappling with financial hardship and contemplating bankruptcy, this blog will describe what life is like after you file for bankruptcy.
You Will Not Be Completely Debt Free By Filing For Bankruptcy
Bankruptcy is very complicated, and there is a general misconception that all debts are eliminated by filing for bankruptcy. This is certainly not the case. There are several debts that won’t be removed, including Centrelink debts, HECS debts, child support, court imposed fines (for instance speeding tickets), and also money that is owed to an insurance company resulting from a car accident where you were uninsured and liable. Alternatively, filing for bankruptcy will eliminate debts such as 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 substantial debts in most cases, such as credit cards, will be eliminated.
Feelings Of Guilt And Embarrassment Are Standard
Bankruptcy is an arduous process and many individuals who declare bankruptcy have feelings of guilt and shame; as if they’ve lost in life. This is quite standard, however it’s paramount to overcome these emotions because the fact is, humans make mistakes, and bankruptcy is a way that you can make a fresh start financially and get your life back on track. The sooner you recover from these feelings of regret, the sooner you’ll be able to begin the recovery process and craft 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 history, so it’s certainly 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 steady 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 acquire loans for secured assets like houses and cars, but your interest rates will be much higher because of your poor credit report. Although it’s not always advisable to obtain loans straight away, it is possible. After seven years from the time you became bankrupt, your credit report will be clean, and you will have the opportunity to obtain all forms of loans again at competitive rates.
Life after filing for bankruptcy definitely isn’t easy, but the emotional relief that most individuals experience after starting the process certainly softens the blow. There are some major financial repercussions 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 difficulties, it’s always best to seek professional advice sooner rather than later. Whatever you do, don’t keep struggling financially for years because you’re afraid of the stigma linked with bankruptcy. It’s not easy, but it’s also not the end of the world. If you ‘d like to speak with someone about your financial condition, reach out to Bankruptcy Experts Coffs Harbour on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: www.bankruptcyexpertscoffsharbour.com.au