Bankruptcy is not a decision that should be taken lightly. There are some major financial consequences involved and your financial freedom will be constrained for years to come. This doesn’t mean 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 file for bankruptcy each year and many of them have the ability to buy homes, cars and acquire 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.
Ultimately, once you have declared bankruptcy, you relinquish control of your finances and assets to a Trustee for protection against litigation that might be taken by your creditors. Once the legal process has been completed, you’ll be undischarged for a specific period of time (in most cases three years) after which time you’ll become discharged, which implies that the financial constraints you sustained 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 declare bankruptcy and what options you’ll have after you become discharged.
You Can’t Leave The Country Without Permission
One of the restraints of declaring bankruptcy is that you cannot exit the country while you’re undischarged unless you seek permission from your Trustee. To do this, you’ll have to provide a lot of details relating to your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel to another country without prior approval from your bankruptcy Trustee, and in most cases will increase the length of your undischarged bankruptcy to a minimum of five years as opposed to three.
You Will Be Offered Credit Immediately
One thing that surprises lots of discharged bankrupts is that they will immediately be offered credit by a wide variety of creditors. The explanation behind this is that you won’t have the ability to file for bankruptcy again for an extended period of time, so creditors understand that they have a good chance of getting their money back if you secure a loan. Sometimes, securing a loan and making timely repayments will help strengthen your credit history, which will aid you in the recovery process. But be wary, 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 immediately. The trick is to rebuild your credit record slowly.
Buying A Home Is Certainly Possible
There’s a standard misconception that once you declare bankruptcy, you will no longer have the chance to obtain credit for a mortgage. This is definitely not the case. Though bankruptcy will leave you with a poor credit rating, you can still purchase a home if you manage to rebuild your credit within a few years, you pay all your bills on time, and you display a responsible use of credit. Of course, you won’t be able to obtain a home loan straight after you’re discharged, so it’s essential to build your credit record carefully before even envisioning securing a home loan.
Check Your Credit Regularly
Most financial experts recommend that discharged bankrupts should review their credit report around twice a year. After initially filing for bankruptcy though, it’s important that you look at your credit report each month for at least the first 6 months into your bankruptcy. A few creditors may still be demanding 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 complications, it’s critical that you monitor your credit report to make sure that it’s accurate and up to date.
While bankruptcy isn’t the ideal situation to be in, it doesn’t mean that your financial future is permanently restricted. There are some severe financial restrictions imposed on people that declare bankruptcy, but after they become discharged and slowly rebuild their credit score, they’re completely capable of securing a bright financial future. Obtaining a mortgage and other credit lines will be possible a few years after discharge if the recovery process is well-planned and executed. For this reason, 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 have to be considered to ensure a smooth recovery process. If you’re thinking about declaring bankruptcy, talk to Bankruptcy Advice on 1300 879 867 or visit their website for more information: www.bankruptcy-advice.com.au/