What Is It Like To Go Bankrupt?
08
August
2017

There’s no question that bankruptcy isn’t the ideal situation to be experiencing. There are some severe financial implications involved and it’s a very complicated and stressful process that will affect you financially for a couple of years to come. Finding yourself in mountains of debt can happen very quickly, and many people end up in this situation because of a wide variety of factors. Not having the ability to work due to illness is one of the most frequent reasons why people file for bankruptcy. It’s not like they had any control over the circumstances, but being unable to repay their debts because 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 rare as some people think. If you ask me, I think that bankruptcy is neither good nor bad. Without a doubt, those who file for bankruptcy have made some bad financial decisions and will penalised accordingly, nevertheless filing for bankruptcy is also the first step to financial freedom. Many individuals struggle for years just to make ends meet, while their debts keep worsening, so in most cases, bankruptcy is a chance for a new beginning for those people that are unable to repay their debts.

Though 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 went through the process. If you’re experiencing financial problems and considering bankruptcy, this article will explain what life is like after you declare bankruptcy.

You Will Not Be Debt Free By Filing For Bankruptcy

Bankruptcy is considerably complicated, and there is a common misconception that all debts are removed by declaring bankruptcy. This is definitely not the case. There are various debts that won’t be eliminated, for instance Centrelink debts, HECS debts, child support, court imposed fines (for instance speeding tickets), and also money that is owed to an insurance provider arising from a car accident where you were uninsured and liable. Alternatively, filing for bankruptcy will eliminate 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 substantial debts in most cases, such as credit cards, will be removed.

Feelings Of Remorse And Embarrassment Are Standard

Bankruptcy is a stressful process and most people who declare bankruptcy have feelings of regret and shame; as if they’ve lost in life. This is standard, however it’s important to overcome these emotions because the fact is, humans make errors, and bankruptcy is a way that you can make a fresh start financially and get your life back on the right track. The sooner you recover from these feelings of regret, the sooner you’ll be able to begin the recovery process and develop a plan of how you’re going to repay your remaining 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 declaring bankruptcy you won’t be able to borrow any money under any circumstances for three years. During this time, it’s important that you start rebuilding your credit history by maintaining a regular 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 obtain loans for secured assets like houses and cars, but your interest rates will be much higher as a result of your poor credit report. Whilst 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 declaring bankruptcy clearly isn’t easy, but the emotional relief that most individuals experience after beginning the process certainly softens the blow. There are some substantial financial consequences 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 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 fear the stigma connected with bankruptcy. It’s challenging, but it’s also not the end of the world. If you ‘d like to speak to someone about your financial predicament, reach out to Bankruptcy Experts Toowoomba on 1300 795 575 for a confidential discussion, or alternatively visit their website for additional information: http://www.bankruptcyexpertstoowoomba.com.au

Sources:

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

 

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