Bankruptcy is not a decision that should be taken lightly. There are some serious financial implications involved and your financial freedom will be limited for years to come. This doesn’t imply that filing for bankruptcy is the end of the world though. It should actually be considered as the first step in securing a bright financial future for you and your family. Millions of individuals declare bankruptcy every year and many 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 filed for bankruptcy will undoubtedly give you insight into making better financial decisions in the future.
In a nutshell, once you have declared bankruptcy, you surrender control of your finances and assets to a Trustee for protection against litigation that may 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 implies that the financial restrictions you sustained during bankruptcy are lifted. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article tries 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 disadvantages of declaring bankruptcy is that you can’t exit the country while you’re undischarged only if you seek permission from your Trustee. To do this, you’ll have to supply a lot of information 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 as opposed to three.
You Will Be Offered Credit Straight Away
One thing that surprises lots of discharged bankrupts is that they will immediately be offered credit by a large range of loan providers. The main reason behind this is that you won’t have the capacity to declare bankruptcy again for an extensive period of time, so lenders 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 strengthen your credit rating, which will assist you in the recovery process. But be warned, you don’t want to take every offer thrown in your direction as some loan providers are very dubious and include hidden fees and charges that can put you in debt again straight away. The key is to rebuild your credit history slowly.
Buying A Home Is Certainly Possible
There’s a standard misconception that after you declare bankruptcy, you will no longer have the capacity to obtain credit for a mortgage. This is certainly not the case. Although bankruptcy will leave you with a poor credit rating, you can still buy a home if you have the capacity to rebuild your credit within a couple of years, you pay all your bills on time, and you exhibit a responsible use of credit. Obviously, you won’t have the ability to get a mortgage straight after you’re discharged, so it’s essential to build your credit rating intelligently before even considering securing a home loan.
Check Your Credit Frequently
Most financial specialists advise that discharged bankrupts should review their credit report at the very least twice a year. After initially declaring bankruptcy though, it’s imperative that you review your credit report each month for at least the first 6 months into your bankruptcy. A number of 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 steer clear of any further complications, it’s necessary that you keep an eye on your credit report to make sure it’s accurate and up to date.
While bankruptcy isn’t the most ideal position to be in, it doesn’t mean that your financial future is permanently limited. There are some severe financial restrictions imposed on individuals that declare bankruptcy, but after they become discharged and slowly rebuild their credit score, they’re completely capable of securing a bright financial future. Securing a mortgage and other lines of credit will be possible a couple of years after discharge if the recovery process is well-planned and implemented. Consequently, it’s vital that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is rather complicated and there are many factors to should be taken into consideration to ensure a smooth recovery process. If you’re considering declaring bankruptcy, reach out to Bankruptcy Experts Northern Rivers on 1300 795 575 or visit their website for more information: www.bankruptcyexpertsnorthernrivers.com.au