There’s no doubt that bankruptcy isn’t the most desirable situation to be dealing with. There are some harsh financial repercussions involved and it’s a very elaborate and stressful process that will affect you financially for several years to come. Ending up in mountains of debt can come about very quickly, and lots of individuals end up in this situation due to a number of factors. Not having the opportunity to work due to illness is one of the most common reasons individuals declare bankruptcy. It’s not like they had any control over the circumstances, but being unable to pay their debts because they have no income is the hard reality they will have to face. Actually, 7,900 individuals in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as rare as some people may think. In my opinion, bankruptcy is neither good nor bad. Indeed, those who file for bankruptcy have made some poor financial decisions and will penalised appropriately, however declaring bankruptcy is also the first step to financial freedom. Some folks struggle for years just to make ends meet, whilst their debts keep multiplying, so in a lot of cases, bankruptcy is a chance for a new beginning for individuals 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, the majority of people are better off and glad they underwent the process. If you’re grappling with financial distress and thinking about bankruptcy, this blog will describe what life is like after you declare 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 numerous debts that won’t be cleared, including Centrelink debts, HECS debts, child support, court imposed fines (like speeding tickets), and money that is owed to an insurance company resulting from a car accident where you were uninsured and at fault. On the other hand, 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 declare bankruptcy, but the most serious debts in many cases, such as credit cards, will be cleared.
Feelings Of Remorse And Embarrassment Are Regular
Bankruptcy is a taxing process and lots of folks who file for bankruptcy have feelings of regret and humiliation; as if they’ve lost in life. This is common, however it’s imperative to overcome these emotions because the fact 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 remorse, the sooner you’ll be able to start the recovery process and develop a plan of how you’re going to repay your remaining 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 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 history by maintaining a stable income and paying your bills and remaining 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 as a result of your bad credit report. Although it’s not always a good idea to acquire loans straight away, it is possible. After seven years from the time you became bankrupt, your credit history will be clean, and you will have the option to receive all forms of loans again at competitive rates.
Life after declaring bankruptcy obviously isn’t easy, but the emotional relief that many individuals experience after beginning the process certainly softens the blow. There are some significant financial repercussions 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 enduring financial problems, it’s always best to seek professional advice sooner rather than later. Whatever you do, don’t keep struggling financially for years because you fear the stigma linked with bankruptcy. It’s not easy, but it’s also not the end of the world. If you ‘d like to talk to someone about your financial situation, contact Bankruptcy Experts Kalgoorlie on 1300 795 575 for a confidential discussion, or alternatively visit their website for additional information: https://www.bankruptcyexpertskalgoorlie.com.au