What Is It Like To Go Bankrupt?
There’s no question that bankruptcy isn’t the most desirable scenario to be dealing with. There are some severe financial repercussions involved and it’s a very problematic and stressful process that will affect you financially for a couple of years to come. Finding yourself in mountains of debt can come about very rapidly, and lots of people find themselves in this situation because of a multitude of factors. Not having the capacity to work due to illness is one of the most common reasons individuals file for bankruptcy. It’s not as if they had any control over the circumstances, but being unable to pay their debts considering that they have no income is the hard reality they have to face. In reality, 7,900 individuals in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people believe. In my opinion, bankruptcy is neither good nor bad. Without a doubt, those who declare bankruptcy have made some poor financial decisions and will penalised as necessary, nevertheless filing for bankruptcy is also the first step to financial freedom. Some people struggle for years just to make ends meet, even though their debts keep worsening, so in a lot of cases, bankruptcy is a chance for a clean slate for people that are unable to repay their debts.
Although I’ve never been bankrupt myself, I’ve witnessed the journey of many people who have and surprisingly, lots of people are better off and glad they underwent the process. If you’re facing financial difficulties and contemplating bankruptcy, this article will outline what life is like after you file for bankruptcy.
You Won’t Be Debt Free By Declaring Bankruptcy
Bankruptcy is rather complicated, and there is a typical 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, such as Centrelink debts, HECS debts, child support, court imposed fines (for instance speeding tickets), as well as money that is owed to an insurance company resulting from a car accident where you were uninsured and in the wrong. Alternatively, filing for bankruptcy will remove debts like credit cards, GST and tax, and unsecured personal loans. The reality is, you will still have debts to pay after you declare bankruptcy, but the most critical debts in many cases, such as credit cards, will be cleared.
Feelings Of Remorse And Embarrassment Are Regular
Bankruptcy is an arduous process and many people who declare bankruptcy have feelings of remorse and humiliation; as if they’ve lost in life. This is natural, however it’s critical to overcome these emotions because the truth is, humans make errors, and bankruptcy is a way that you can start a new beginning financially and get your life back on the right track. The sooner you recover from these feelings of regret, 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 rating. Always remember, 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 declaring bankruptcy you won’t be able to borrow any money under any circumstances for three years. During this time, it’s critical that you start rebuilding your credit history 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 option to receive loans for secured assets like houses and cars, but your interest rates will be much higher as a result of your bad credit history. While it’s not always sensible 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 chance to receive all types of loans again at competitive rates.
Life after declaring bankruptcy surely isn’t easy, but the emotional relief that many individuals experience after starting the process certainly softens the blow. There are some severe financial repercussions involved, but declaring bankruptcy is the first step towards financial freedom and securing a bright future for you and your family. If you’re enduring financial difficulties, 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 connected with bankruptcy. It’s difficult, but it’s also not the end of the world. If you ‘d like to speak with someone about your financial situation, reach out to Bankruptcy Experts Geelong on 1300 795 575 for a confidential discussion, or alternatively visit their website for more details: http://www.bankruptcyexpertsgeelong.com.au