What Is It Like To Go Bankrupt?
There’s no question that bankruptcy isn’t the ideal scenario to be confronting. There are some unpleasant financial penalties involved and it’s a very tough and stressful process that will affect you financially for years to come. Finding yourself in mountains of debt can materialise very quickly, and lots of individuals end up in this situation due to a wide range of factors. Not having the capacity to work resulting from illness is one of the most common reasons people declare bankruptcy. It’s not like they had any control over the situation, but being unable to pay off their debts because they have no income is the hard reality they 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. If you ask me, I think that bankruptcy is neither good nor bad. Without a doubt, those who declare bankruptcy have made some poor financial decisions and will reprimanded accordingly, nevertheless filing for bankruptcy is also the first step to financial freedom. Lots of people struggle for years just to make ends meet, while their debts keep worsening, so in many cases, bankruptcy is an opportunity for a new beginning for individuals that are unable to repay their debts.
Though I’ve never been bankrupt personally, I’ve witnessed the journey of many people who have and surprisingly, most people are better off and glad they went through the process. If you’re facing financial distress and considering bankruptcy, this article will summarise what life is like after you declare bankruptcy.
You Will Not Be Completely Debt Free By Filing For Bankruptcy
Bankruptcy is quite complicated, and there is a standard misconception that all debts are eliminated by filing for bankruptcy. This is certainly not the case. There are a range of debts that won’t be removed, for example Centrelink debts, HECS debts, child support, court imposed fines (like speeding tickets), as well as money that is owed to an insurance company arising from a car accident where you were uninsured and liable. Conversely, filing for 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 declare bankruptcy, but the most critical debts in many cases, such as credit cards, will be eliminated.
Feelings Of Regret And Shame Are Normal
Bankruptcy is an arduous process and lots of people who declare bankruptcy have feelings of guilt and shame; as if they’ve lost in life. This is quite regular, however it’s imperative to overcome these emotions because the truth is, humans make mistakes, and bankruptcy is a way that you can make a fresh start financially and get your life back on track. The sooner you recover from these feelings of guilt, the sooner you’ll be able to start the recovery process and create a plan of how you’re going to repay your remaining debts and rebuild your credit rating. Bear in mind, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit report, 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 critical that you start rebuilding your credit rating by maintaining a regular 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 opportunity to attain loans for secured assets like houses and cars, but your interest rates will be much higher because of your bad credit report. Although it’s not always sensible 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 secure all types of loans again at competitive rates.
Life after declaring bankruptcy certainly isn’t easy, but the emotional relief that most individuals experience after starting the process definitely softens the blow. There are some serious 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 confronting financial distress, it’s always best to seek professional advice sooner rather than later. Whatever you do, don’t keep battling financially for years because you’re afraid of the stigma connected with bankruptcy. It’s challenging, but it’s also not the end of the world. If you ‘d like to talk with someone about your financial situation, contact Bankruptcy Experts Tamworth on 1300 795 575 for a confidential discussion, or alternatively visit their website for more details: www.bankruptcyexpertstamworth.com.au