There’s no question that bankruptcy isn’t a desirable scenario to be confronting. There are some severe financial penalties involved and it’s a very complex and stressful process that will affect you financially for years to come. Finding yourself in mountains of debt can transpire in a heartbeat, and lots of individuals end up in this situation due to a multitude of factors. Not having the capacity to work due to illness is one of the most frequent reasons why people file for bankruptcy. It’s not as if they had any control over the circumstances, but being unable to pay off their debts simply because they have no income is the hard reality they need to face. In reality, 7,900 individuals in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people believe. In my opinion, bankruptcy is neither good nor bad. Yes, those who declare bankruptcy have made some bad financial decisions and will punished as necessary, nevertheless declaring bankruptcy is also the first step to financial freedom. Some individuals struggle for years just to make ends meet, whilst their debts keep compounding, so in many cases, bankruptcy is a chance for a fresh start for those individuals that are unable to repay their debts.
Though I’ve never been bankrupt myself, I’ve witnessed the journey of lots of people who have and surprisingly, most people are better off and glad they underwent the process. If you’re experiencing financial distress and considering bankruptcy, this blog will explain what life is like after you declare bankruptcy.
You Will Not Be Completely Debt Free By Filing For Bankruptcy
Bankruptcy is considerably complicated, and there is a general misconception that all debts are cleared by declaring bankruptcy. This is certainly not the case. There are a range of debts that won’t be removed, for instance Centrelink debts, HECS debts, child support, court imposed fines (for example speeding tickets), and money that is owed to an insurance company arising from a car accident where you were uninsured and in the wrong. On the other hand, declaring bankruptcy will clear debts such as credit cards, GST and tax, and unsecured personal loans. The truth is, you will still have debts to pay after you file for bankruptcy, but the most significant debts in most cases, such as credit cards, will be removed.
Feelings Of Regret And Humiliation Are Standard
Bankruptcy is a demanding process and lots of people who declare bankruptcy have feelings of remorse and embarrassment; as if they’ve lost in life. This is natural, however it’s paramount to overcome these emotions because the truth is, humans make errors, 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 work out a plan of how you’re going to repay your remaining debts and rebuild your credit report. Keep in mind, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit history, so it’s definitely 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 critical that you start rebuilding your credit history by maintaining a consistent 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 opportunity to obtain loans for secured assets like houses and cars, but your interest rates will be much higher because of your bad credit history. Although it’s not always recommended to acquire 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 obtain all types of loans again at competitive rates.
Life after filing for bankruptcy certainly isn’t easy, but the emotional relief that most people experience after beginning the process definitely softens the blow. There are some serious financial consequences 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 dealing with 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’re afraid of the stigma associated with bankruptcy. It’s challenging, but it’s also not the end of the world. If you ‘d like to talk to someone about your financial position, reach out to Bankruptcy Experts Penrith on 1300 795 575 for a confidential discussion, or alternatively visit their website for more details: https://www.bankruptcyexpertspenrith.com.au