There’s no question that bankruptcy isn’t the most desirable scenario to be experiencing. There are some major financial penalties involved and it’s a very demanding 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 rapidly, and lots of individuals end up in this situation due to a number of factors. Not having the opportunity to work resulting from illness is one of the most frequent reasons individuals file for bankruptcy. It’s not as if they had any control over the circumstances, but being unable to repay their debts because they have no income is the hard reality they have to face. As a matter of fact, 7,900 people in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as rare as some people think. If you ask me, I think that bankruptcy is neither good nor bad. Indeed, those who file for bankruptcy have made some bad financial decisions and will penalised as necessary, but filing for bankruptcy is also the first step to financial freedom. A great deal of people struggle for years just to make ends meet, even though their debts keep worsening, so in most cases, bankruptcy is a chance for a clean slate for those that are unable to repay their debts.
Even though I’ve never been bankrupt myself, 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 grappling with financial hardship and thinking about bankruptcy, this blog will illustrate what life is like after you declare bankruptcy.
You Won’t Be Debt Free By Declaring Bankruptcy
Bankruptcy is rather complicated, and there is a standard misconception that all debts are cleared by declaring bankruptcy. This is certainly not the case. There are a range of debts that won’t be removed, such as Centrelink debts, HECS debts, child support, court imposed fines (for instance speeding tickets), as well as money that is owed to an insurance company resulting from a car accident where you were uninsured and in the wrong. On the other hand, filing for 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 file for bankruptcy, but the most critical debts in most cases, such as credit cards, will be cleared.
Feelings Of Regret And Shame Are Ordinary
Bankruptcy is a demanding process and lots of folks who file for bankruptcy have feelings of guilt and embarrassment; as if they’ve lost in life. This is regular, however it’s critical to overcome these emotions because the fact is, humans make errors, and bankruptcy is a way that you can make a fresh start financially and get your life back on track. The sooner you recover from these feelings of guilt, 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. Remember, 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 vital 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 option to receive loans for secured assets like houses and cars, but your interest rates will be much higher as a result of your poor credit history. Whilst it’s not always suggested to attain 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 option to acquire all forms of loans again at competitive rates.
Life after declaring bankruptcy surely isn’t easy, but the emotional relief that most people experience after beginning the process definitely softens the blow. There are some heavy 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 coping with financial problems, 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 linked with bankruptcy. It’s challenging, but it’s also not the end of the world. If you ‘d like to talk to someone about your financial predicament, get in contact with Bankruptcy Experts Port Macquarie on 1300 795 575 for a confidential discussion, or alternatively visit their website for more details: http://www.bankruptcyexpertsportmacquarie.com.au