There’s no question that bankruptcy isn’t a desirable scenario to be experiencing. There are some drastic financial implications involved and it’s a very difficult and stressful process that will affect you financially for a couple of years to come. Ending up in mountains of debt can transpire in a heartbeat, and lots of individuals end up in this situation because of a number of factors. Not having the capacity to work resulting from illness is one of the most common reasons why people declare bankruptcy. It’s not like they had any control over the circumstances, but being unable to pay off their debts since they have no income is the hard reality they must face. In truth, 7,900 individuals in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as uncommon as some people believe. If you ask me, I think that bankruptcy is neither good nor bad. Certainly, those who declare bankruptcy have made some bad financial decisions and will reprimanded as necessary, nonetheless declaring bankruptcy is also the first step to financial freedom. Lots of folks struggle for years just to make ends meet, even though their debts keep compounding, so in a lot of cases, bankruptcy is a chance for a fresh start for those that are unable to repay their debts.
Whilst I’ve never been bankrupt myself, I’ve witnessed the journey of many people who have and surprisingly, most individuals are better off and glad they went through the process. If you’re enduring financial hardship and thinking about bankruptcy, this post will describe what life is like after you declare bankruptcy.
You Won’t Be Debt Free By Filing For Bankruptcy
Bankruptcy is pretty complicated, and there is a general 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, for instance Centrelink debts, HECS debts, child support, court imposed fines (for example speeding tickets), as well as money that is owed to an insurance company resulting from a car accident where you were uninsured and at fault. On the other hand, filing for bankruptcy will eliminate debts like credit cards, GST and tax, and unsecured personal loans. The reality is, you will still have debts to pay after you file for bankruptcy, but the most significant debts in many cases, such as credit cards, will be removed.
Feelings Of Remorse And Shame Are Natural
Bankruptcy is a stressful process and many people who declare bankruptcy have feelings of remorse and humiliation; as if they’ve lost in life. This is regular, however it’s crucial to overcome these emotions because the truth is, humans make mistakes, and bankruptcy is a way that you can go back to square one financially and get your life back on the right track. The sooner you recover from these feelings of embarrassment, the sooner you’ll be able to start the recovery process and craft a plan of how you’re going to repay your remaining debts and rebuild your credit rating. Remember, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit rating, 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 paramount that you start rebuilding your credit rating by maintaining a consistent 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 chance to secure loans for secured assets like houses and cars, but your interest rates will be much higher as a result of your poor credit rating. Even 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 report will be clean, and you will have the opportunity to secure all forms of loans again at competitive rates.
Life after declaring bankruptcy definitely isn’t easy, but the emotional relief that many individuals experience after beginning the process definitely softens the blow. There are some severe 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 dealing with financial difficulties, 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 not easy, but it’s also not the end of the world. If you ‘d like to speak to someone about your financial predicament, get in touch with Bankruptcy Experts Hervey Bay on 1300 795 575 for a confidential discussion, or alternatively visit their website for more details: http://www.bankruptcyexpertsherveybay.com.au