There’s no doubt that bankruptcy isn’t a desirable situation to be experiencing. There are some severe financial consequences involved and it’s a very tough and stressful process that will affect you financially for a couple of years to come. Ending up in mountains of debt can happen in the blink of an eye, and lots of people end up in this situation because of a wide variety of factors. Not having the capacity to work resulting from illness is one of the most common reasons people file for bankruptcy. It’s not like they had any control over the situation, but being unable to pay off their debts simply because they have no income is the hard reality they have to face. In reality, 7,900 people in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as rare as some people may think. If you ask me, I think that bankruptcy is neither good nor bad. Certainly, 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. Lots of folks struggle for years just to make ends meet, whilst their debts keep compounding, so in a lot of cases, bankruptcy is a chance for a clean slate for those that are unable to repay their debts.
Although I’ve never been bankrupt personally, I’ve witnessed the journey of lots of individuals who have and surprisingly, the majority of people are better off and glad they underwent the process. If you’re facing financial difficulties and thinking about bankruptcy, this article will illustrate what life is like after you declare bankruptcy.
You Will Not Be Debt Free By Filing For Bankruptcy
Bankruptcy is quite complicated, and there is a common misconception that all debts are cleared by declaring bankruptcy. This is definitely not the case. There are several debts that won’t be cleared, for instance Centrelink debts, HECS debts, child support, court imposed fines (such as speeding tickets), and money that is owed to an insurance provider resulting from a car accident where you were uninsured and liable. Alternatively, filing for bankruptcy will eliminate debts like credit cards, GST and tax, and unsecured personal loans. The truth is, you will still have debts to pay after you declare bankruptcy, but the most substantial debts in many cases, such as credit cards, will be removed.
Feelings Of Regret And Humiliation Are Standard
Bankruptcy is a taxing process and lots of people who file for bankruptcy have feelings of guilt and embarrassment; as if they’ve lost in life. This is normal, however it’s imperative to overcome these emotions because the truth is, humans make mistakes, and bankruptcy is a way that you can go back to square one financially and get your life back on the right track. The sooner you recover from these feelings of regret, the sooner you’ll be able to start the recovery process and work out a plan of how you’re going to repay your remaining debts and rebuild your credit report. Bear in mind, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit rating, so it’s certainly not the end of the world.
You Can’t Borrow Any Money For Three Years
Unfortunately, by declaring 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 consistent 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 opportunity to attain loans for secured assets like houses and cars, but your interest rates will be much higher because of your bad credit rating. While it’s not always advisable 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 opportunity to obtain all forms of loans again at competitive rates.
Life after declaring bankruptcy definitely isn’t easy, but the emotional relief that many people experience after beginning the process certainly softens the blow. There are some major financial penalties involved, but declaring 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 linked 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 state of affairs, get in contact with Bankruptcy Experts Perth on 1300 795 575 for a confidential discussion, or alternatively visit their website for additional information: Bankruptcy Perth