What Is It Like To Go Bankrupt?
There’s no doubt that bankruptcy isn’t the ideal situation to be confronting. There are some severe financial repercussions involved and it’s a very difficult and stressful process that will affect you financially for a couple of years to come. Finding yourself in mountains of debt can develop faster than you think, and many individuals find themselves in this situation due to a variety of factors. Not having the ability to work resulting from illness is one of the most frequent reasons why people file for bankruptcy. It’s not as if they had any control over the situation, but being unable to repay their debts due to the fact that they have no income is the hard reality they must face. In reality, 7,900 people in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people think. If you ask me, I think that bankruptcy is neither good nor bad. Indeed, those who declare bankruptcy have made some poor financial decisions and will reprimanded as necessary, however declaring 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 many cases, bankruptcy is an opportunity for a fresh start for individuals that are unable to repay their debts.
Though I’ve never been bankrupt personally, I’ve witnessed the journey of many people who have and surprisingly, lots of people are better off and glad they went through the process. If you’re enduring financial distress and thinking about bankruptcy, this post will explain what life is like after you file for bankruptcy.
You Won’t Be Completely Debt Free By Filing For Bankruptcy
Bankruptcy is considerably complicated, and there is a general misconception that all debts are removed by filing for bankruptcy. This is certainly not the case. There are various debts that won’t be eliminated, including Centrelink debts, HECS debts, child support, court imposed fines (for example speeding tickets), as well as money that is owed to an insurance provider resulting 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 fact is, you will still have debts to pay after you declare bankruptcy, but the most notable debts in many cases, such as credit cards, will be cleared.
Feelings Of Guilt And Shame Are Regula
Bankruptcy is a taxing process and many individuals who declare bankruptcy have feelings of regret and shame; as if they’ve lost in life. This is quite regular, however it’s important to overcome these emotions because the truth is, humans make errors, and bankruptcy is a way that you can go back to square one financially and get your life back on track. The sooner you recover from these feelings of self-loathing, the sooner you’ll be able to begin the recovery process and work out a plan of how you’re going to repay your outstanding debts and rebuild your credit rating. Bear in mind, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit rating, so it’s definitely 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 crucial that you start rebuilding your credit report by maintaining a regular 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 secure loans for secured assets like houses and cars, but your interest rates will be much higher because of your poor credit report. Though it’s not always advisable to acquire loans straight away, it is possible. After seven years from the time you became bankrupt, your credit history will be clean, and you will have the chance to obtain 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 certainly 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 struggling 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 talk with someone about your financial position, get in touch with Bankruptcy Experts Bunbury on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: www.bankruptcyexpertsbunbury.com.au