There’s no question that bankruptcy isn’t the best situation to be experiencing. There are some drastic financial penalties involved and it’s a very complex and stressful process that will affect you financially for a couple of years to come. Finding yourself in mountains of debt can come about very rapidly, and many individuals find themselves in this situation due to a number of factors. Not having the opportunity to work resulting from illness is one of the most frequent reasons why individuals file for bankruptcy. It’s not as if they had any control over the circumstances, but being unable to pay their debts considering that they have no income is the hard reality they must face. In truth, 7,900 individuals in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as rare as some people think. If you ask me, I think that bankruptcy is neither good nor bad. Without a doubt, those who declare bankruptcy have made some bad financial decisions and will penalised appropriately, nevertheless filing for bankruptcy is also the first step to financial freedom. Many folks struggle for years just to make ends meet, even though their debts keep multiplying, so in many cases, bankruptcy is a chance for a new beginning for those that are unable to repay their debts.
Whilst I’ve never been bankrupt personally, I’ve witnessed the journey of many people who have and surprisingly, the majority of people are better off and glad they underwent the process. If you’re facing financial problems and considering bankruptcy, this post will illustrate what life is like after you declare bankruptcy.
You Won’t Be Debt Free By Declaring Bankruptcy
Bankruptcy is very complicated, and there is a general misconception that all debts are cleared by filing for bankruptcy. This is definitely not the case. There are various debts that won’t be removed, for instance Centrelink debts, HECS debts, child support, court imposed fines (like speeding tickets), and also money that is owed to an insurance company resulting from a car accident where you were uninsured and at fault. But, 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 file for bankruptcy, but the most significant debts in most cases, such as credit cards, will be cleared.
Feelings Of Guilt And Embarrassment Are Normal
Bankruptcy is an arduous process and most people who declare bankruptcy have feelings of regret and embarrassment; as if they’ve lost in life. This is natural, however it’s paramount 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 the right track. The sooner you recover from these feelings of shame, the sooner you’ll be able to start the recovery process and work out a plan of how you’re going to repay your outstanding 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 definitely 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 vital that you start rebuilding your credit history 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 opportunity to acquire loans for secured assets like houses and cars, but your interest rates will be much higher as a result of your bad credit report. While 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 option to acquire all kinds of loans again at competitive rates.
Life after filing for bankruptcy surely isn’t easy, but the emotional relief that most individuals experience after starting the process definitely softens the blow. There are some significant 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 confronting financial problems, 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 challenging, but it’s also not the end of the world. If you ‘d like to talk to someone about your financial position, get in contact with Bankruptcy Experts Mackay on 1300 795 575 for a confidential discussion, or alternatively visit their website for additional information: www.bankruptcyexpertsmackay.com.au