Bankruptcy is not a decision that should be taken lightly. There are some heavy financial repercussions involved and your financial freedom will be restricted for several years to come. This doesn’t suggest that declaring bankruptcy is the end of the world though. It should actually be considered as the first step in securing a bright financial future for you and your family. Millions of individuals declare bankruptcy every year and many of them have the capacity to buy homes, cars and attain credit cards after they’re discharged. In addition to this, understanding what life is like after you have declared bankruptcy will surely give you insight into making better financial decisions in the future.
In simple terms, once you have declared bankruptcy, you relinquish control of your finances and assets to a Trustee in exchange for protection against legal proceeding that may be taken by your creditors. Once the legal process has been finalised, you’ll be undischarged for a specific period of time (in most cases 3 years) after which time you’ll become discharged, which means that the financial constraints you incurred during bankruptcy are removed. 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 restrictions of declaring bankruptcy is that you can’t leave the country while you’re undischarged unless you request permission from your Trustee. To do this, you’ll need to supply a lot of information relating to your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel internationally without prior approval from your bankruptcy Trustee, and in many cases will increase the length of your undischarged bankruptcy to a minimum of five years as opposed to three.
You Will Be Offered Credit Straight Away
One thing that surprises lots of discharged bankrupts is that they will immediately be offered credit by a large variety of lending institutions. The reason behind this is that you won’t have the ability to file for bankruptcy again for a lengthy period of time, so creditors understand that they have a good chance of getting their money back if you secure a loan. In certain situations, obtaining a loan and making timely repayments will help strengthen your credit rating, which will help you in the recovery process. But be wary, 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 score steadily.
Buying A Home Is Certainly Possible
There’s a regular misconception that after you declare bankruptcy, you will no longer have the chance to acquire credit for a mortgage. This is certainly not the case. Although bankruptcy will leave you with a bad credit history, you can still buy a home if you have the ability to rebuild your credit within a couple of years, you pay all your bills on time, and you demonstrate a responsible use of credit. Naturally, you won’t have the ability to acquire a mortgage straight after you’re discharged, so it’s important to build your credit record intelligently before even thinking of securing a mortgage.
Check Your Credit Frequently
Most financial experts advise that discharged bankrupts should take a look at their credit report about twice a year. After initially declaring bankruptcy though, it’s paramount that you look at your credit report each month for at least the first 6 months into your bankruptcy. A few 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 difficulties, it’s essential that you monitor your credit report to make sure that it’s accurate and up to date.
Whilst bankruptcy isn’t the ideal situation to be in, it doesn’t mean that your financial future is permanently limited. There are some serious financial restrictions imposed on individuals that file for bankruptcy, but after they become discharged and slowly rebuild their credit history, they’re completely capable of securing a bright financial future. Obtaining home loans and other credit lines will be possible a few years after discharge if the recovery process is well-planned and implemented. For this reason, it’s imperative that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is considerably complicated and there are many factors to need to be taken into account to ensure a smooth recovery process. If you’re contemplating filing for bankruptcy, reach out to Bankruptcy Experts Tennant Creek on 1300 795 575 or visit their website for more information: www.bankruptcyexpertstennantcreek.com.au