- Jun 16, 2017
Bankruptcy is not a decision that should be taken lightly. There are some serious financial implications involved and your financial freedom will be limited for many years to come. This doesn’t mean that declaring bankruptcy is the end of the world though. It should actually be thought of as the first step in securing a bright financial future for you and your family. Millions of individuals file for bankruptcy each year and most of them have the capacity to buy homes, cars and obtain credit cards after they’re discharged. Further 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 a nutshell, once you have filed for bankruptcy, you forfeit control of your finances and assets to a Trustee in exchange for protection against legal proceeding that might be taken by your creditors. Once the legal process has been completed, you’ll be undischarged for a specific period of time (in most cases 3 years) after which time you’ll become discharged, which indicates that the financial stipulations you incurred during bankruptcy are lifted. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article tries to achieve is to give you an understanding of what happens after you file for bankruptcy and what options you’ll have after you become discharged.
You Can’t Leave The Country Without Permission
One of the restraints 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 details regarding your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel internationally without prior consent from your bankruptcy Trustee, and in most cases will increase the duration of your undischarged bankruptcy to a minimum of five years instead of three.
You Will Be Offered Credit Immediately
One thing that surprises many discharged bankrupts is that they will immediately be offered credit by a wide variety of creditors. The main reason behind this is that you won’t have the capacity to declare 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. Occasionally, acquiring a loan and making timely repayments will help improve your credit history, which will aid you in the recovery process. But beware, you don’t want to accept 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 straight away. The trick is to rebuild your credit history progressively.
Buying A Home Is Definitely Possible
There’s a popular misconception that whenever you declare bankruptcy, you will no longer have the opportunity to obtain credit for a home loan. This is definitely not the case. Though bankruptcy will leave you with a poor credit history, you can still purchase a home if you manage to rebuild your credit within a couple of years, you pay all your bills on time, and you exhibit a responsible use of credit. Obviously, you won’t have the ability to acquire a home loan straight after you’re discharged, so it’s essential to build your credit rating intelligently before even thinking about securing a home loan.
Check Your Credit On A Regular Basis
Most financial specialists advise that discharged bankrupts should examine their credit report about twice a year. After initially filing for bankruptcy though, it’s essential that you check your credit report each month for at least the first six months into your bankruptcy. Some creditors may still be requesting payments even though you are not required to make payments on any debts that were discharged in the bankruptcy process. So to steer clear of any further difficulties, it’s pressing that you keep track of your credit report to ensure it’s accurate and up to date.
While bankruptcy isn’t the preferred position to be in, it doesn’t mean that your financial future is permanently restrained. There are some severe financial constraints imposed on people that declare bankruptcy, but after they become discharged and slowly rebuild their credit history, they’re perfectly capable of securing a bright financial future. Obtaining a mortgage and other credit lines will be possible a couple of years after discharge if the recovery process is well-planned and executed. Hence, it’s critical that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is rather complicated and there are many factors to must be taken into account to ensure a smooth recovery process. If you’re thinking about declaring bankruptcy, speak with Bankruptcy Experts Cairns on 1300 795 575 or visit their website for additional information: www.bankruptcyexpertscairns.com.au