There’s no doubt that bankruptcy isn’t the ideal scenario to be confronting. There are some major financial implications involved and it’s a very exhausting and stressful process that will affect you financially for several years to come. Ending up in mountains of debt can transpire in the blink of an eye, and lots of individuals end up in this situation because of a number of factors. Not being able to work resulting from illness is one of the most frequent reasons why individuals declare bankruptcy. It’s not like they had any control over the situation, but being unable to settle their debts since they have no income is the hard reality they need to face. Actually, 7,900 individuals in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as uncommon as some people may believe. If you ask me, I think that bankruptcy is neither good nor bad. Yes, those who file for bankruptcy have made some bad financial decisions and will reprimanded accordingly, nevertheless filing for bankruptcy is also the first step to financial freedom. Many folks struggle for years just to make ends meet, while their debts keep compounding, so in most cases, bankruptcy is a chance for a new beginning for people that are unable to repay their debts.
While I’ve never been bankrupt personally, I’ve witnessed the journey of lots of individuals who have and surprisingly, most people are better off and glad they underwent the process. If you’re encountering financial distress and contemplating bankruptcy, this blog will explain what life is like after you file for bankruptcy.
You Will Not Be Debt Free By Filing For Bankruptcy
Bankruptcy is quite complicated, and there is a frequent misconception that all debts are removed by filing for bankruptcy. This is definitely not the case. There are several debts that won’t be cleared, for example Centrelink debts, HECS debts, child support, court imposed fines (for example speeding tickets), as well as money that is owed to an insurance provider arising from a car accident where you were uninsured and in the wrong. On the contrary, filing for bankruptcy will remove debts like credit cards, GST and tax, and unsecured personal loans. The truth is, you will still have debts to pay after you file for bankruptcy, but the most notable debts in many cases, such as credit cards, will be cleared.
Feelings Of Remorse And Shame Are Natural
Bankruptcy is an arduous process and many individuals who file for bankruptcy have feelings of guilt and embarrassment; as if they’ve lost in life. This is quite regular, however it’s crucial to overcome these emotions because the reality is, humans make errors, and bankruptcy is a way that you can make a fresh start financially and get your life back on the right track. The sooner you recover from these feelings of shame, the sooner you’ll be able to begin the recovery process and create a plan of how you’re going to repay your remaining debts and rebuild your credit report. Don’t forget, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit history, 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 report by maintaining a steady 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 chance to attain loans for secured assets like houses and cars, but your interest rates will be much higher as a result of your bad credit history. Though it’s not always a good idea to secure 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 obtain all kinds of loans again at competitive rates.
Life after filing for bankruptcy clearly isn’t easy, but the emotional relief that most individuals experience after beginning the process certainly softens the blow. There are some considerable 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 dealing with financial problems, 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 related to bankruptcy. It’s not easy, but it’s also not the end of the world. If you ‘d like to speak with someone about your financial position, get in contact with Bankruptcy Experts Adelaide on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: http://www.bankruptcyexpertsadelaide.com.au