There’s no doubt that bankruptcy isn’t the ideal situation to be grappling with. There are some harsh financial repercussions involved and it’s a very complex and stressful process that will affect you financially for years to come. Ending up in mountains of debt can come about very rapidly, and many individuals find themselves in this situation due to a wide range of factors. Not having the opportunity to work due to illness is one of the most frequent reasons why individuals declare bankruptcy. It’s not like 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 have to face. In truth, 7,900 people in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as rare as some people may think. In my opinion, bankruptcy is neither good nor bad. Of course, those who file for bankruptcy have made some bad financial decisions and will punished accordingly, nonetheless declaring bankruptcy is also the first step to financial freedom. Some folks struggle for years just to make ends meet, while their debts keep multiplying, so in most cases, bankruptcy is an opportunity for a fresh start for people that are unable to repay their debts.
Whilst I’ve never been bankrupt personally, 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 facing financial problems and thinking about bankruptcy, this article will explain what life is like after you declare bankruptcy.
You Won’t Be Debt Free By Filing For Bankruptcy
Bankruptcy is quite complicated, and there is a standard misconception that all debts are removed by filing for bankruptcy. This is definitely not the case. There are several debts that won’t be removed, including Centrelink debts, HECS debts, child support, court imposed fines (for instance speeding tickets), and also money that is owed to an insurance company resulting from a car accident where you were uninsured and liable. But, declaring bankruptcy will clear debts like credit cards, GST and tax, and unsecured personal loans. The fact is, you will still have debts to pay after you file for bankruptcy, but the most serious debts in most cases, such as credit cards, will be eliminated.
Feelings Of Guilt And Humiliation Are Ordinary
Bankruptcy is a demanding process and lots of people who declare bankruptcy have feelings of guilt and shame; as if they’ve lost in life. This is regular, however it’s paramount to overcome these emotions because the reality 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 embarrassment, the sooner you’ll be able to start the recovery process and develop a plan of how you’re going to repay your outstanding debts and rebuild your credit rating. Don’t forget, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit history, so it’s certainly 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 essential that you start rebuilding your credit report by maintaining a steady 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 option to attain loans for secured assets like houses and cars, but your interest rates will be much higher due to your bad credit rating. Whilst it’s not always a good idea 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 chance to secure all forms of loans again at competitive rates.
Life after filing for bankruptcy obviously isn’t easy, but the emotional relief that many individuals experience after beginning the process certainly softens the blow. There are some serious 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 encountering 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 connected with bankruptcy. It’s difficult, but it’s also not the end of the world. If you ‘d like to speak to someone about your financial circumstances, contact Bankruptcy Experts Hobart on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: http://www.bankruptcyexpertshobart.com.au