There’s no question that bankruptcy isn’t the best scenario to be confronting. There are some serious financial repercussions involved and it’s a very exhausting and stressful process that will affect you financially for a couple of years to come. Finding yourself in mountains of debt can come about very quickly, and lots of people find themselves in this situation as a result of a wide range of factors. Not having the capacity to work due to illness is one of the most common reasons why individuals file for bankruptcy. It’s not as if they had any control over the circumstances, but being unable to settle their debts considering that they have no income is the hard reality they have to face. In truth, 7,900 individuals in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people may believe. In my opinion, bankruptcy is neither good nor bad. Of course, those who file for bankruptcy have made some poor financial decisions and will penalised accordingly, but filing for bankruptcy is also the first step to financial freedom. Lots of individuals struggle for years just to make ends meet, while their debts keep multiplying, so in a lot of cases, bankruptcy is an opportunity for a fresh start for those that are unable to repay their debts.
Although I’ve never been bankrupt myself, I’ve witnessed the journey of many individuals who have and surprisingly, the majority of people are better off and glad they underwent the process. If you’re experiencing financial hardship and considering bankruptcy, this post will describe what life is like after you declare bankruptcy.
You Will Not Be Debt Free By Declaring Bankruptcy
Bankruptcy is rather complicated, and there is a common misconception that all debts are removed by declaring bankruptcy. This is definitely not the case. There are numerous debts that won’t be cleared, for instance Centrelink debts, HECS debts, child support, court imposed fines (such as speeding tickets), and also money that is owed to an insurance provider arising from a car accident where you were uninsured and liable. On the other hand, declaring bankruptcy will clear debts such as credit cards, GST and tax, and unsecured personal loans. The reality 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 Remorse And Embarrassment Are Natural
Bankruptcy is a taxing process and many individuals who declare bankruptcy have feelings of regret and embarrassment; as if they’ve lost in life. This is quite common, however it’s paramount 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 the right track. The sooner you recover from these feelings of shame, the sooner you’ll be able to start the recovery process and craft a plan of how you’re going to repay your outstanding debts and rebuild your credit rating. Always remember, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit rating, 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 essential that you start rebuilding your credit report 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 opportunity to receive loans for secured assets like houses and cars, but your interest rates will be much higher because of your poor credit history. Whilst it’s not always suggested to secure 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 acquire all types of loans again at competitive rates.
Life after filing for bankruptcy surely isn’t easy, but the emotional relief that most people experience after beginning the process definitely softens the blow. There are some severe financial repercussions 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 facing financial hardship, it’s always best to seek professional advice sooner rather than later. Whatever you do, don’t keep struggling financially for years because you fear the stigma related to bankruptcy. It’s challenging, but it’s also not the end of the world. If you ‘d like to speak to someone about your financial state of affairs, get in touch with Bankruptcy Experts Mildura on 1300 795 575 for a confidential discussion, or alternatively visit their website for more details: http://www.bankruptcyexpertsmildura.com.au