There’s no question that bankruptcy isn’t a desirable scenario to be dealing with. There are some harsh financial penalties involved and it’s a very exhausting and stressful process that will affect you financially for years to come. Ending up in mountains of debt can develop in a heartbeat, and many people end up in this situation due to a variety of factors. Not having the ability to work resulting from illness is one of the most common reasons people declare bankruptcy. It’s not as if they had any control over the circumstances, but being unable to pay off their debts given that they have no income is the hard reality they have to face. In fact, 7,900 individuals in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people believe. If you ask me, I think that bankruptcy is neither good nor bad. Indeed, those who file for bankruptcy have made some bad financial decisions and will penalised as necessary, however declaring bankruptcy is also the first step to financial freedom. Many folks struggle for years just to make ends meet, even though their debts keep worsening, so often times, bankruptcy is a chance for a clean slate for people that are unable to repay their debts.
Even though I’ve never been bankrupt personally, I’ve witnessed the journey of lots of individuals who have and surprisingly, the majority of people are better off and glad they underwent the process. If you’re encountering financial difficulties and thinking about bankruptcy, this post will summarise what life is like after you declare bankruptcy.
You Won’t Be Completely Debt Free By Filing For Bankruptcy
Bankruptcy is very complicated, and there is a standard misconception that all debts are cleared by filing for bankruptcy. This is definitely not the case. There are a range of debts that won’t be cleared, for instance Centrelink debts, HECS debts, child support, court imposed fines (such as speeding tickets), and money that is owed to an insurance provider arising from a car accident where you were uninsured and liable. On the contrary, declaring bankruptcy will clear debts like credit cards, GST and tax, and unsecured personal loans. The reality is, you will still have debts to pay after you file for bankruptcy, but the most critical debts in most cases, such as credit cards, will be eliminated.
Feelings Of Guilt And Shame Are Regular
Bankruptcy is a taxing process and many people who file for bankruptcy have feelings of guilt and humiliation; as if they’ve lost in life. This is common, however it’s crucial to overcome these emotions because the truth 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 regret, the sooner you’ll be able to begin the recovery process and work out a plan of how you’re going to repay your outstanding debts and rebuild your credit rating. Just remember, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit rating, so it’s certainly 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 crucial that you start rebuilding your credit history by maintaining a consistent 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 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 suggested to obtain loans straight away, it is possible. After seven years from the time you became bankrupt, your credit report will be clean, and you will have the option to acquire all kinds of loans again at competitive rates.
Life after declaring bankruptcy certainly isn’t easy, but the emotional relief that most individuals experience after beginning the process definitely softens the blow. There are some heavy financial penalties 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 dealing with financial difficulties, it’s always best to seek professional advice sooner rather than later. Whatever you do, don’t keep struggling financially for years because you’re afraid of 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 position, get in touch with Bankruptcy Experts Tennant Creek on 1300 795 575 for a confidential discussion, or alternatively visit their website for additional information: http://www.bankruptcyexpertstennantcreek.com.au