There’s no question that bankruptcy isn’t the most desirable scenario to be grappling with. There are some major financial repercussions involved and it’s a very demanding and stressful process that will affect you financially for several years to come. Finding yourself in mountains of debt can materialise very quickly, and many individuals end up in this situation due to a number of factors. Not having the ability to work due to illness is one of the most common reasons why individuals declare bankruptcy. It’s not as if they had any control over the situation, but being unable to pay their debts considering that they have no income is the hard reality they need to face. Actually, 7,900 individuals in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as uncommon as some people think. In my opinion, bankruptcy is neither good nor bad. Of course, those who declare bankruptcy have made some bad financial decisions and will punished appropriately, but filing for bankruptcy is also the first step to financial freedom. A great deal of folks struggle for years just to make ends meet, while their debts keep worsening, so in most cases, bankruptcy is an opportunity for a clean slate for those individuals that are unable to repay their debts.
Whilst I’ve never been bankrupt personally, I’ve witnessed the journey of many people who have and surprisingly, most individuals are better off and glad they underwent the process. If you’re dealing with financial hardship and considering bankruptcy, this blog will detail what life is like after you declare bankruptcy.
You Will Not Be Completely Debt Free By Declaring Bankruptcy
Bankruptcy is relatively complicated, and there is a typical misconception that all debts are removed by filing for bankruptcy. This is certainly not the case. There are a range of debts that won’t be cleared, for example Centrelink debts, HECS debts, child support, court imposed fines (for instance speeding tickets), and money that is owed to an insurance provider resulting from a car accident where you were uninsured and at fault. Alternatively, filing for bankruptcy will remove debts like credit cards, GST and tax, and unsecured personal loans. The truth is, you will still have debts to pay after you declare bankruptcy, but the most significant debts in most cases, such as credit cards, will be removed.
Feelings Of Regret And Embarrassment Are Ordinary
Bankruptcy is a stressful process and many people who file for bankruptcy have feelings of guilt and embarrassment; as if they’ve lost in life. This is normal, however it’s paramount to overcome these emotions because the reality is, humans make errors, and bankruptcy is a way that you can make a fresh start financially and get your life back on the right track. The sooner you recover from these feelings of humiliation, the sooner you’ll be able to start the recovery process and create a plan of how you’re going to repay your outstanding debts and rebuild your credit report. Don’t forget, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit report, 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 important that you start rebuilding your credit history by maintaining a regular 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 acquire loans for secured assets like houses and cars, but your interest rates will be much higher due to your bad credit report. Even though it’s not always suggested 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 option to acquire all kinds 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 certainly softens the blow. There are some significant financial penalties 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 problems, 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 connected with 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 predicament, reach out to Gold Coast Bankruptcy Centre on 1300 795 575 for a confidential discussion, or alternatively visit their website for additional information: www.goldcoastbankruptcycentre.com.au