Bankruptcy is not a decision that should be taken lightly. There are some harsh financial implications involved and your financial freedom will be confined for several years to come. This doesn’t imply that declaring bankruptcy is the end of the world though. It should actually be considered as the first step in securing a bright financial future for you and your family. Millions of people declare bankruptcy every year and the majority of them are able to buy homes, cars and acquire credit cards after they’re discharged. Further to this, understanding what life is like after you have declared bankruptcy will certainly give you insight into making better financial decisions in the future.
Fundamentally, once you have filed for bankruptcy, you give up control of your finances and assets to a Trustee in exchange for protection against legal action that might be taken by your creditors. Once the legal process has been finalised, you’ll be undischarged for a specific period of time (in most cases three years) after which time you’ll become discharged, which means that the financial restraints you suffered during bankruptcy are lifted. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article aims to achieve is to give you an understanding of what happens after you declare bankruptcy and what options you’ll have after you become discharged.
You Can’t Leave The Country Without Permission
One of the drawbacks of declaring bankruptcy is that you cannot exit the country while you’re undischarged unless you request permission from your Trustee. To do this, you’ll need 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 to another country without prior permission from your bankruptcy Trustee, and in most cases will increase the length of your undischarged bankruptcy to at least five years rather than three.
You Will Be Offered Credit Instantly
One thing that surprises lots of discharged bankrupts is that they will immediately be offered credit by a wide range of lending institutions. The reason behind this is that you won’t be able to file for bankruptcy again for an extended period of time, so lenders understand that they have a good chance of getting their money back if you secure a loan. Sometimes, acquiring a loan and making timely repayments will help strengthen your credit rating, which will help you in the recovery process. But be warned, you don’t want to take 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 instantly. The trick is to rebuild your credit history steadily.
Buying A Home Is Certainly Possible
There’s a frequent misconception that once you file for bankruptcy, you will no longer have the ability to attain credit for a mortgage. This is definitely not the case. While bankruptcy will leave you with a poor credit rating, you can still purchase a home if you have the ability to rebuild your credit within a few years, you pay all your bills on time, and you exhibit a responsible use of credit. Needless to say, you won’t have the capacity to obtain a home loan straight after you’re discharged, so it’s imperative to build your credit rating carefully before even considering securing a home loan.
Check Your Credit Regularly
Most financial specialists recommend that discharged bankrupts should review their credit report around twice a year. After initially filing for bankruptcy though, it’s imperative that you examine your credit report every month for at least the first 6 months into your bankruptcy. Certain creditors may still be requesting payments even though you are not required to make payments on any debts that were discharged in the bankruptcy process. So to prevent any further difficulties, it’s critical that you keep track of your credit report to make sure that it’s accurate and up to date.
While bankruptcy isn’t the most ideal position to be in, it doesn’t mean that your financial future is permanently constrained. There are some serious financial restraints imposed on people that file for bankruptcy, but after they become discharged and slowly rebuild their credit rating, they’re perfectly capable of securing a bright financial future. Attaining home loans and other credit lines will be possible a few years after discharge if the recovery process is well-planned and executed. Thus, it’s vital that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is quite complicated and there are many factors to need to be taken into account to ensure a smooth recovery process. If you’re thinking about filing for bankruptcy, talk with Bankruptcy Experts Perth on 1300 795 575 or visit their website for additional information: www.bankruptcyexpertsperth.com.au