Bankruptcy is not a decision that should be taken lightly. There are some severe financial consequences involved and your financial freedom will be restrained for years to come. This doesn’t imply that declaring bankruptcy is the end of the world though. It should actually be thought of as the first step in securing a bright financial future for you and your family. Millions of people file for bankruptcy every year and many of them have the ability to buy homes, cars and obtain credit cards after they’re discharged. In addition to this, understanding what life is like after you have filed for bankruptcy will definitely give you insight into making better financial decisions in the future.
In a nutshell, once you have declared bankruptcy, you forfeit control of your finances and assets to a Trustee in exchange for protection against potential lawsuits that could be taken by your creditors. Once the legal process has been finalised, you’ll be undischarged for a certain period of time (in most cases 3 years) after which time you’ll become discharged, which indicates that the financial restraints you sustained during bankruptcy are lifted. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article aims 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 disadvantages of declaring bankruptcy is that you cannot leave the country while you’re undischarged only if you seek permission from your Trustee. To do this, you’ll need to supply 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 internationally without prior consent from your bankruptcy Trustee, and in most cases will increase the length of your undischarged bankruptcy to at least five years instead of 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 main reason behind this is that you won’t be able to declare bankruptcy again for an extensive period of time, so creditors understand that they have a good chance of getting their money back if you secure a loan. Occasionally, securing a loan and making timely repayments will help improve your credit rating, which will help you in the recovery process. But be careful, you don’t want to take every offer thrown in your direction as some financial institutions are very dubious and include hidden fees and charges that can put you in debt again instantly. The key is to rebuild your credit record progressively.
Buying A Home Is Certainly Possible
There’s a typical misconception that whenever you declare bankruptcy, you will no longer have the opportunity to attain credit for a home loan. This is definitely not the case. While 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 in a timely manner, and you exhibit a responsible use of credit. Needless to say, you won’t be able to acquire a home loan straight after you’re discharged, so it’s necessary to build your credit history carefully before even envisioning securing a home loan.
Check Your Credit On A Regular Basis
Most financial specialists advise that discharged bankrupts should review their credit report at the very least twice a year. After initially filing for bankruptcy though, it’s important that you look at your credit report monthly for at least the first six months into your bankruptcy. A number of 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 stay clear of any further complications, it’s paramount that you keep an eye on your credit report to make sure it’s accurate and up to date.
Whilst bankruptcy isn’t the ideal position to be in, it doesn’t mean that your financial future is permanently limited. There are some serious financial constraints imposed on people that file for bankruptcy, but after they become discharged and slowly rebuild their credit score, they’re perfectly capable of securing a bright financial future. Attaining a mortgage and other credit lines will be possible a few years after discharge if the recovery process is well-planned and implemented. Thus, it’s imperative that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is rather complicated and there are many factors to need to be taken into consideration to ensure a smooth recovery process. If you’re contemplating declaring bankruptcy, contact Bankruptcy Advice Perth on 1300 879 867 or visit their website for more information: www.bankruptcy-advice.com.au/perth