There’s no question that bankruptcy isn’t the best situation to be grappling with. There are some unpleasant financial penalties involved and it’s a very tough and stressful process that will affect you financially for several years to come. Ending up in mountains of debt can happen in a heartbeat, and many people find themselves in this situation due to a variety of factors. Not being able to work due to illness is one of the most common reasons individuals declare bankruptcy. It’s not as if they had any control over the situation, but being unable to settle their debts due to the fact that they have no income is the hard reality they will have to face. Actually, 7,900 people in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people think. In my opinion, bankruptcy is neither good nor bad. Certainly, those who declare bankruptcy have made some bad financial decisions and will reprimanded accordingly, but filing for bankruptcy is also the first step to financial freedom. A great deal of folks struggle for years just to make ends meet, while their debts keep compounding, so in most cases, bankruptcy is an opportunity for a new beginning for individuals that are unable to repay their debts.
Even though 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 underwent the process. If you’re grappling with financial difficulties and contemplating bankruptcy, this blog will illustrate what life is like after you declare bankruptcy.
You Will Not Be Completely Debt Free By Filing For Bankruptcy
Bankruptcy is rather complicated, and there is a frequent misconception that all debts are cleared by declaring bankruptcy. This is certainly not the case. There are various sorts of debts that won’t be removed, for example Centrelink debts, HECS debts, child support, court imposed fines (for instance speeding tickets), and money that is owed to an insurance provider arising from a car accident where you were uninsured and liable. Alternatively, declaring bankruptcy will clear debts like credit cards, GST and tax, and unsecured personal loans. The truth is, you will still have debts to pay after you file for bankruptcy, but the most substantial debts in many cases, such as credit cards, will be eliminated.
Feelings Of Guilt And Humiliation Are Ordinary
Bankruptcy is a stressful process and lots of people who file for bankruptcy have feelings of regret and shame; as if they’ve lost in life. This is quite common, however it’s imperative to overcome these emotions because the reality 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 guilt, the sooner you’ll be able to begin the recovery process and create a plan of how you’re going to repay your remaining debts and rebuild your credit rating. Bear in mind, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit rating, 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 stable 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 opportunity to acquire loans for secured assets like houses and cars, but your interest rates will be much higher due to your poor credit history. Even though it’s not always suggested to acquire loans straight away, it is possible. After seven years from the time you became bankrupt, your credit rating will be clean, and you will have the option to acquire all forms of loans again at competitive rates.
Life after filing for bankruptcy surely 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 difficulties, it’s always best to seek professional advice sooner rather than later. Whatever you do, don’t keep struggling financially for years because you’re afraid of the stigma associated 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 predicament, get in contact with Bankruptcy Advice on 1300 879 867 for a confidential discussion, or alternatively visit their website for more information: www.bankruptcy-advice.com.au/