What Happens After You File For Bankruptcy
Bankruptcy is not a decision that should be taken lightly. There are some severe financial consequences involved and your financial freedom will be confined for years to come. This doesn’t imply that filing for bankruptcy is the end of the world though. It should really be regarded as the first step in securing a bright financial future for you and your family. Millions of people file for bankruptcy each year and a lot of them are able 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 forfeit control of your finances and assets to a Trustee for protection against litigation that may 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 3 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 drawbacks of declaring bankruptcy is that you can’t 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 information regarding 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 at least five years rather than three.
You Will Be Offered Credit Straight Away
One thing that surprises many discharged bankrupts is that they will immediately be offered credit by a vast array of loan providers. The explanation behind this is that you won’t have the capacity to file for bankruptcy again for an extensive period of time, so lenders 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 score, which will aid you in the recovery process. But be wary, you don’t want to accept 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 straight away. The trick is to rebuild your credit score slowly.
Buying A Home Is Definitely Possible
There’s a frequent misconception that whenever you file for bankruptcy, you will no longer have the ability to secure credit for a home loan. This is certainly not the case. Even though bankruptcy will leave you with a bad credit score, you can still buy a home if you’re able to rebuild your credit within a few years, you pay all your bills in a timely manner, and you demonstrate a responsible use of credit. Needless to say, you won’t be able to obtain a home loan straight after you’re discharged, so it’s paramount to build your credit history sensibly before even envisioning securing a mortgage.
Check Your Credit On A Regular Basis
Most financial specialists recommend that discharged bankrupts should examine their credit report around twice a year. After initially filing for bankruptcy though, it’s imperative that you examine your credit report each month for at least the first 6 months into your bankruptcy. A couple 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 prevent any further complications, it’s necessary that you keep track of your credit report to make sure it’s correct and up to date.
While bankruptcy isn’t the ideal position to be in, it doesn’t mean that your financial future is permanently restricted. There are some severe financial restrictions imposed on individuals that declare bankruptcy, but after they become discharged and slowly rebuild their credit rating, 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. Hence, it’s paramount 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 must be taken into consideration to ensure a smooth recovery process. If you’re contemplating filing for bankruptcy, contact Bankruptcy Experts Geelong on 1300 795 575 or visit their website for more details: www.bankruptcyexpertsgeelong.com.au