What Happens After You Declare Bankruptcy
Bankruptcy is not a decision that should be taken lightly. There are some unpleasant financial repercussions involved and your financial freedom will be limited for several years to come. This doesn’t indicate that declaring bankruptcy is the end of the world though. It should really be considered as the first step in securing a bright financial future for you and your family. Millions of individuals declare bankruptcy every year and many 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 declared bankruptcy will naturally give you insight into making better financial decisions in the future.
In a nutshell, once you have filed for bankruptcy, you hand over control of your finances and assets to a Trustee in exchange for protection against legal proceeding 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 means that the financial restraints 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 aspires 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 disadvantages of declaring bankruptcy is that you cannot exit the country while you’re undischarged only if you request permission from your Trustee. To do this, you’ll need to provide a lot of information relating to your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel abroad without prior approval from your bankruptcy Trustee, and in many cases will increase the duration of your undischarged bankruptcy to at least five years as opposed to 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 variety of lenders. The explanation behind this is that you won’t be able to file for bankruptcy again for a long period of time, so creditors understand that they have a good chance of getting their money back if you secure a loan. In some cases, acquiring a loan and making timely repayments will help improve your credit history, which will aid you in the recovery process. But be careful, you don’t want to accept every offer thrown in your direction as some lenders 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 rating gradually.
Buying A Home Is Definitely Possible
There’s a typical misconception that when you declare bankruptcy, you will no longer have the capacity to obtain credit for a home loan. This is certainly not the case. Whilst bankruptcy will leave you with a bad credit score, you can still purchase 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. Naturally, you won’t have the ability to get a mortgage straight after you’re discharged, so it’s crucial to build your credit history carefully before even thinking about 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 filing for bankruptcy though, it’s essential that you examine your credit report each month for at least the first 6 months into your bankruptcy. Various creditors may still be demanding payments despite the fact that you are not required to make payments on any debts that were discharged in the bankruptcy process. So to minimise any further difficulties, it’s necessary that you monitor your credit report to ensure it’s accurate and up to date.
Whilst bankruptcy isn’t the most ideal position to be in, it doesn’t mean that your financial future is permanently limited. There are some severe financial restrictions imposed on individuals that file for bankruptcy, but after they become discharged and slowly rebuild their credit history, they’re perfectly capable of securing a bright financial future. Attaining a mortgage and other lines of credit will be possible a few years after discharge if the recovery process is well-planned and executed. For this reason, it’s imperative that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is considerably complicated and there are many factors to need to be taken into consideration to ensure a smooth recovery process. If you’re thinking of filing for bankruptcy, phone Bankruptcy Experts Wollongong on 1300 795 575 or visit their website for additional information: www.bankruptcyexpertswollongong.com.au