Bankruptcy is not a decision that should be taken lightly. There are some major financial consequences involved and your financial freedom will be confined 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 people declare bankruptcy each year and a lot of them are able to buy homes, cars and obtain credit cards after they’re discharged. In addition to this, understanding what life is like after you have filed for bankruptcy will certainly give you insight into making better financial decisions in the future.
Generally speaking, once you have filed for bankruptcy, you surrender control of your finances and assets to a Trustee in exchange for protection against legal action that could be taken by your creditors. Once the legal process has been finalised, you’ll be undischarged for a specific period of time (in most cases three years) after which time you’ll become discharged, which signifies that the financial limitations you sustained during bankruptcy are removed. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article intends 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 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 approval from your bankruptcy Trustee, and in most cases will increase the length of your undischarged bankruptcy to at least five years instead of three.
You Will Be Offered Credit Instantly
One thing that surprises lots of discharged bankrupts is that they will immediately be offered credit by a large variety of lending institutions. The explanation behind this is that you won’t have the capacity to declare 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 certain situations, securing a loan and making timely repayments will help improve your credit score, which will assist you in the recovery process. But be mindful, you don’t want to accept 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 immediately. The trick is to rebuild your credit history slowly.
Buying A Home Is Certainly Possible
There’s a regular misconception that when you file for bankruptcy, you will no longer have the opportunity to obtain credit for a mortgage. This is certainly not the case. Although bankruptcy will leave you with a poor credit score, you can still buy a home if you manage to rebuild your credit within a few years, you pay all your bills in a timely manner, and you exhibit a responsible use of credit. Naturally, you won’t have the capacity to obtain a mortgage straight after you’re discharged, so it’s key to build your credit score intelligently before even envisioning securing a home loan.
Check Your Credit Regularly
Most financial experts recommend that discharged bankrupts should review their credit report around twice a year. After initially filing for bankruptcy though, it’s essential that you review your credit report every month for at least the first 6 months into your bankruptcy. Certain creditors may still be demanding payments despite the fact that 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 pressing that you monitor your credit report to make sure it’s correct and up to date.
Though bankruptcy isn’t the most ideal situation to be in, it doesn’t mean that your financial future is permanently restrained. There are some serious financial constraints imposed on individuals that declare bankruptcy, but after they become discharged and slowly rebuild their credit rating, 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 implemented. For this reason, it’s important 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 have to be considered to ensure a smooth recovery process. If you’re considering declaring bankruptcy, reach out to Bankruptcy Experts Penrith on 1300 795 575 or visit their website for more details: www.bankruptcyexpertspenrith.com.au