What Is It Like To Go Bankrupt?
There’s no doubt that bankruptcy isn’t the ideal situation to be experiencing. There are some drastic financial penalties involved and it’s a very elaborate and stressful process that will affect you financially for several years to come. Finding yourself in mountains of debt can develop very quickly, and many individuals find themselves in this situation as a result of a wide variety of factors. Not having the opportunity to work due to illness is one of the most frequent reasons why people declare bankruptcy. It’s not as if they had any control over the circumstances, but being unable to pay off their debts since they have no income is the hard reality they have to face. In fact, 7,900 people in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as uncommon as some people may think. If you ask me, I think that bankruptcy is neither good nor bad. Yes, 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. Some individuals struggle for years just to make ends meet, while their debts keep multiplying, so in a lot of cases, bankruptcy is a chance for a fresh start for individuals that are unable to repay their debts.
Although I’ve never been bankrupt myself, I’ve witnessed the journey of lots of people who have and surprisingly, many people are better off and glad they went through the process. If you’re facing financial distress and thinking about bankruptcy, this article will outline what life is like after you declare bankruptcy.
You Won’t Be Debt Free By Filing For Bankruptcy
Bankruptcy is very complicated, and there is a common misconception that all debts are cleared by filing for bankruptcy. This is certainly not the case. There are several debts that won’t be eliminated, for instance Centrelink debts, HECS debts, child support, court imposed fines (for instance speeding tickets), and money that is owed to an insurance provider resulting from a car accident where you were uninsured and liable. On the contrary, filing for bankruptcy will clear debts like credit cards, GST and tax, and unsecured personal loans. The reality is, you will still have debts to pay after you file for bankruptcy, but the most significant debts in most cases, such as credit cards, will be removed.
Feelings Of Guilt And Humiliation Are Natural
Bankruptcy is a demanding process and many individuals who file for bankruptcy have feelings of guilt and humiliation; as if they’ve lost in life. This is common, however it’s critical to overcome these emotions because the truth is, humans make mistakes, and bankruptcy is a way that you can start a new beginning financially and get your life back on track. The sooner you recover from these feelings of humiliation, the sooner you’ll be able to begin the recovery process and create a plan of how you’re going to repay your outstanding debts and rebuild your credit history. Remember, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit history, 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 essential that you start rebuilding your credit report by maintaining a consistent income and paying your bills and outstanding 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 due to your bad credit report. Though it’s not always a good idea to obtain loans straight away, it is possible. After seven years from the time you became bankrupt, your credit report will be clean, and you will have the chance to acquire all sorts 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 definitely softens the blow. There are some serious financial implications 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 battling financially for years because you fear the stigma related to 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 position, get in touch with Bankruptcy Experts Wollongong on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: http://www.bankruptcyexpertswollongong.com.au