There’s no doubt that bankruptcy isn’t the ideal scenario to be experiencing. There are some severe financial consequences involved and it’s a very problematic and stressful process that will affect you financially for several years to come. Finding yourself in mountains of debt can come about faster than you think, and lots of people find themselves in this situation due to a wide variety of factors. Not having the capacity to work due to illness is one of the most frequent reasons individuals file for bankruptcy. It’s not as if they had any control over the situation, but being unable to settle their debts simply because they have no income is the hard reality they will have to face. In fact, 7,900 people in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people may believe. In my opinion, bankruptcy is neither good nor bad. Of course, those who declare bankruptcy have made some poor financial decisions and will reprimanded appropriately, nonetheless declaring bankruptcy is also the first step to financial freedom. A great deal of people struggle for years just to make ends meet, whilst their debts keep compounding, so in a lot of cases, bankruptcy is an opportunity for a new beginning for those that are unable to repay their debts.
Even though I’ve never been bankrupt myself, I’ve witnessed the journey of lots of people who have and surprisingly, most people are better off and glad they went through the process. If you’re experiencing financial distress and considering bankruptcy, this post will detail what life is like after you file for bankruptcy.
You Won’t Be Debt Free By Declaring Bankruptcy
Bankruptcy is quite complicated, and there is a frequent misconception that all debts are cleared by filing for bankruptcy. This is certainly not the case. There are numerous debts that won’t be eliminated, such as Centrelink debts, HECS debts, child support, court imposed fines (such as speeding tickets), and money that is owed to an insurance provider resulting from a car accident where you were uninsured and liable. On the other hand, declaring bankruptcy will eliminate debts like credit cards, GST and tax, and unsecured personal loans. The truth is, you will still have debts to pay after you declare bankruptcy, but the most serious debts in most cases, such as credit cards, will be cleared.
Feelings Of Regret And Shame Are Regular
Bankruptcy is a stressful process and lots of folks who file for bankruptcy have feelings of remorse and embarrassment; as if they’ve lost in life. This is quite normal, however it’s essential 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 track. The sooner you recover from these feelings of self-loathing, 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 history. Always remember, 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 filing for bankruptcy you won’t be able to borrow any money under any circumstances for three years. During this time, it’s necessary that you start rebuilding your credit report by maintaining a steady 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 option to attain loans for secured assets like houses and cars, but your interest rates will be much higher as a result of your poor credit rating. While it’s not always suggested to acquire loans straight away, it is possible. After seven years from the time you became bankrupt, your credit history will be clean, and you will have the chance to receive all kinds of loans again at competitive rates.
Life after filing for bankruptcy certainly isn’t easy, but the emotional relief that most people experience after beginning the process definitely softens the blow. There are some serious financial consequences 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 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 state of affairs, reach out to Bankruptcy Experts Cairns on 1300 795 575 for a confidential discussion, or alternatively visit their website for more details: www.bankruptcyexpertscairns.com.au