Bankruptcy is not a decision that should be taken lightly. There are some serious financial implications involved and your financial freedom will be constrained for several years to come. This doesn’t indicate that declaring bankruptcy is the end of the world though. It should really be regarded as the first step in securing a bright financial future for you and your family. Millions of people declare bankruptcy every year and a lot of them have the capacity to buy homes, cars and obtain credit cards after they’re discharged. Along with this, understanding what life is like after you have filed for bankruptcy will most definitely give you insight into making better financial decisions in the future.
In essence, once you have declared bankruptcy, you give up control of your finances and assets to a Trustee in exchange for protection against legal action that could be taken by your creditors. Once the legal process has been completed, you’ll be undischarged for a certain period of time (in most cases 3 years) after which time you’ll become discharged, which implies that the financial limitations you suffered during bankruptcy are removed. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article tries to achieve is to give you an understanding of what happens after you file for bankruptcy and what options you’ll have after you become discharged.
You Can’t Leave The Country Without Permission
One of the restrictions of declaring bankruptcy is that you cannot exit the country while you’re undischarged unless you seek permission from your Trustee. To do this, you’ll have to supply a lot of details regarding your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel abroad without prior consent from your bankruptcy Trustee, and in most cases will increase the duration of your undischarged bankruptcy to at least five years as opposed to three.
You Will Be Offered Credit Immediately
One thing that surprises a lot of discharged bankrupts is that they will immediately be offered credit by a vast range of loan providers. The explanation behind this is that you won’t be able to file for bankruptcy again for an extended period of time, so creditors understand that they have a good chance of getting their money back if you secure a loan. Sometimes, securing a loan and making timely repayments will help strengthen your credit history, which will aid you in the recovery process. But be cautious, you don’t want to accept every offer thrown in your direction as some lending institutions are very dubious and include hidden fees and charges that can put you in debt again straight away. The trick is to rebuild your credit record slowly.
Buying A Home Is Certainly Possible
There’s a frequent misconception that when you file for bankruptcy, you will no longer have the opportunity to secure credit for a mortgage. This is definitely not the case. Though bankruptcy will leave you with a bad credit history, you can still buy a home if you manage to rebuild your credit within a couple of years, you pay all your bills in a timely manner, and you demonstrate a responsible use of credit. Obviously, you won’t have the ability to get a mortgage straight after you’re discharged, so it’s paramount to build your credit record sensibly before even envisioning securing a home loan.
Check Your Credit Frequently
Most financial experts advise that discharged bankrupts should inspect their credit report at least twice a year. After initially declaring bankruptcy though, it’s crucial that you look at your credit report monthly for at least the first six months into your bankruptcy. A number of creditors may still be demanding payments even though you are not required to make payments on any debts that were discharged in the bankruptcy process. So to avoid any further complications, it’s pressing that you keep an eye on your credit report to ensure it’s accurate and up to date.
While bankruptcy isn’t the most ideal situation to be in, it doesn’t mean that your financial future is permanently limited. There are some severe financial restrictions imposed on individuals that declare bankruptcy, but after they become discharged and slowly rebuild their credit history, they’re completely capable of securing a bright financial future. Obtaining a mortgage and other credit lines will be possible a few years after discharge if the recovery process is well-planned and executed. Hence, it’s vital that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is rather complicated and there are many factors to need to be considered to ensure a smooth recovery process. If you’re contemplating declaring bankruptcy, speak to Bankruptcy Experts Port Macquarie on 1300 795 575 or visit their website for more information: www.bankruptcyexpertsportmacquarie.com.au