There’s no doubt that bankruptcy isn’t a desirable situation to be grappling with. There are some serious financial consequences involved and it’s a very problematic and stressful process that will affect you financially for several years to come. Ending up in mountains of debt can transpire in the blink of an eye, and many people end up in this situation as a result of a variety of factors. Not having the ability to work resulting from illness is one of the most frequent reasons why individuals file for bankruptcy. It’s not like they had any control over the situation, but being unable to pay off their debts because they have no income is the hard reality they will have to face. Actually, 7,900 people in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people believe. If you ask me, I think that bankruptcy is neither good nor bad. Yes, those who declare bankruptcy have made some poor financial decisions and will reprimanded appropriately, nonetheless filing for bankruptcy is also the first step to financial freedom. Some folks struggle for years just to make ends meet, whilst their debts keep compounding, so in most cases, bankruptcy is a chance for a fresh start for those people that are unable to repay their debts.
Although I’ve never been bankrupt personally, I’ve witnessed the journey of many people who have and surprisingly, many people are better off and glad they went through the process. If you’re experiencing financial distress and contemplating bankruptcy, this post will describe what life is like after you declare bankruptcy.
You Will Not Be Completely Debt Free By Filing For Bankruptcy
Bankruptcy is relatively complicated, and there is a general misconception that all debts are removed by declaring bankruptcy. This is certainly not the case. There are various sorts of debts that won’t be cleared, such as Centrelink debts, HECS debts, child support, court imposed fines (for example speeding tickets), and money that is owed to an insurance company resulting from a car accident where you were uninsured and at fault. But, declaring bankruptcy will remove debts such as credit cards, GST and tax, and unsecured personal loans. The reality is, you will still have debts to pay after you declare bankruptcy, but the most notable debts in most cases, such as credit cards, will be eliminated.
Feelings Of Remorse And Humiliation Are Standard
Bankruptcy is a demanding process and many people who declare bankruptcy have feelings of regret and humiliation; as if they’ve lost in life. This is quite regular, however it’s necessary to overcome these emotions because the truth is, humans make errors, and bankruptcy is a way that you can start a new beginning financially and get your life back on track. The sooner you recover from these feelings of shame, the sooner you’ll be able to begin the recovery process and work out a plan of how you’re going to repay your remaining debts and rebuild your credit report. Bear in mind, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit rating, 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 critical that you start rebuilding your credit history by maintaining a consistent income and paying your bills and outstanding debts on time. It’s simple but effective. After this three-year process, you become a discharged bankrupt and will have the chance to receive loans for secured assets like houses and cars, but your interest rates will be much higher because of your poor credit report. While it’s not always sensible to attain 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 opportunity to acquire all kinds of loans again at competitive rates.
Life after declaring bankruptcy certainly isn’t easy, but the emotional relief that most individuals experience after starting the process certainly softens the blow. There are some major financial implications involved, but filing for bankruptcy is the first step towards financial freedom and securing a bright future for you and your family. If you’re encountering financial hardship, 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 related to bankruptcy. It’s not easy, but it’s also not the end of the world. If you ‘d like to talk to someone about your financial condition, contact Bankruptcy Experts Northern Rivers on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: http://www.bankruptcyexpertsnorthernrivers.com.au