There’s no doubt that bankruptcy isn’t the best scenario to be confronting. There are some serious financial repercussions involved and it’s a very difficult and stressful process that will affect you financially for several years to come. Finding yourself in mountains of debt can transpire very rapidly, and lots of people end up in this situation due to a variety of factors. Not having the ability to work resulting from illness is one of the most frequent reasons people file for bankruptcy. It’s not as if they had any control over the situation, but being unable to settle their debts because they have no income is the hard reality they will have to face. In truth, 7,900 people in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people may think. In my opinion, bankruptcy is neither good nor bad. Of course, those who declare bankruptcy have made some poor financial decisions and will penalised as necessary, nevertheless declaring bankruptcy is also the first step to financial freedom. Some individuals struggle for years just to make ends meet, while their debts keep worsening, so in a lot of cases, bankruptcy is an opportunity for a fresh start for those people that are unable to repay their debts.

 

While I’ve never been bankrupt personally, I’ve witnessed the journey of lots of individuals who have and surprisingly, lots of people are better off and glad they went through the process. If you’re grappling with financial problems and considering bankruptcy, this post will illustrate what life is like after you file for bankruptcy.

 

You Won’t Be Completely Debt Free By Declaring Bankruptcy

 

Bankruptcy is quite complicated, and there is a frequent misconception that all debts are eliminated by filing for bankruptcy. This is certainly not the case. There are several debts that won’t be removed, for instance Centrelink debts, HECS debts, child support, court imposed fines (for instance speeding tickets), and money that is owed to an insurance provider arising from a car accident where you were uninsured and liable. On the other hand, filing for bankruptcy will remove debts such as 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 serious debts in most cases, such as credit cards, will be removed.

 

Feelings Of Remorse And Humiliation Are Ordinary

 

Bankruptcy is a demanding process and lots of people who declare bankruptcy have feelings of guilt and shame; as if they’ve lost in life. This is quite normal, 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 remorse, the sooner you’ll be able to begin the recovery process and create a plan of how you’re going to repay your remaining debts and rebuild your credit report. Bear in mind, 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 declaring bankruptcy you won’t be able to borrow any money under any circumstances for three years. During this time, it’s imperative 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 option to attain loans for secured assets like houses and cars, but your interest rates will be much higher because of your bad credit rating. While it’s not always appropriate to attain 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 opportunity to secure all types of loans again at competitive rates.

 

Life after declaring bankruptcy obviously isn’t easy, but the emotional relief that most people experience after starting the process definitely softens the blow. There are some considerable financial implications 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 fear the stigma related to bankruptcy. It’s difficult, but it’s also not the end of the world. If you ‘d like to speak with someone about your financial condition, get in touch with Bankruptcy Experts Gympie on 1300 795 575 for a confidential discussion, or alternatively visit their website for more details: http://www.bankruptcyexpertsgympie.com.au

 

Sources:

 

https://www.afsa.gov.au/statistics/personal-insolvency-statistics-0