What Happens After You File For Bankruptcy
Bankruptcy is not a decision that should be taken lightly. There are some unpleasant financial consequences involved and your financial freedom will be limited for years to come. This doesn’t suggest that declaring bankruptcy is the end of the world though. It should actually be considered as the first step in securing a bright financial future for you and your family. Millions of individuals file for bankruptcy every year and the majority of them have the capacity to buy homes, cars and acquire credit cards after they’re discharged. In addition to this, understanding what life is like after you have filed for bankruptcy will not surprisingly give you insight into making better financial decisions in the future.
In a nutshell, once you have declared bankruptcy, you forfeit control of your finances and assets to a Trustee for protection against legal action that might be taken by your creditors. Once the legal process has been finalised, you’ll be undischarged for a certain period of time (in most cases three years) after which time you’ll become discharged, which signifies that the financial limitations you incurred during bankruptcy are lifted. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article tries to achieve is to give you an understanding of what happens after you declare bankruptcy and what options you’ll have after you become discharged.
You Can’t Leave The Country Without Permission
One of the limitations of declaring bankruptcy is that you can’t exit the country while you’re undischarged unless you request permission from your Trustee. To do this, you’ll have to supply a lot of details relating to your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel internationally without prior permission from your bankruptcy Trustee, and in many cases will increase the length of your undischarged bankruptcy to a minimum of five years rather than three.
You Will Be Offered Credit Immediately
One thing that surprises plenty of discharged bankrupts is that they will immediately be offered credit by a vast range of lending institutions. The explanation behind this is that you won’t be able to file for bankruptcy again for an extended period of time, so creditors understand that they have a good chance of getting their money back if you secure a loan. Sometimes, acquiring a loan and making timely repayments will help strengthen your credit score, which will assist you in the recovery process. But be mindful, you don’t want to accept every offer thrown in your direction as some financial institutions are very dubious and include hidden fees and charges that can put you in debt again instantly. The trick is to rebuild your credit rating slowly.
Buying A Home Is Certainly Possible
There’s a regular misconception that after you declare bankruptcy, you will no longer have the capacity to obtain credit for a home loan. This is definitely not the case. While bankruptcy will leave you with a bad credit rating, you can still purchase a home if you manage to rebuild your credit within a few years, you pay all your bills in a timely manner, and you demonstrate a responsible use of credit. Naturally, you won’t have the capacity to get a home loan straight after you’re discharged, so it’s critical to build your credit rating carefully before even contemplating securing a mortgage.
Check Your Credit Frequently
Most financial specialists advise that discharged bankrupts should inspect their credit report around twice a year. After initially filing for bankruptcy though, it’s vital that you look at your credit report every month for at least the first 6 months into your bankruptcy. A few creditors may still be demanding payments despite the fact that you are not required to make payments on any debts that were discharged in the bankruptcy process. So to avoid any further difficulties, it’s necessary that you monitor your credit report to ensure it’s accurate and up to date.
Whilst bankruptcy isn’t the ideal situation to be in, it doesn’t mean that your financial future is permanently limited. There are some serious financial limitations imposed on people that declare bankruptcy, but after they become discharged and slowly rebuild their credit score, they’re completely capable of securing a bright financial future. Obtaining home loans and other lines of credit will be possible a few years after discharge if the recovery process is well-planned and implemented. Hence, it’s important that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is quite complicated and there are many factors to need to be considered to ensure a smooth recovery process. If you’re considering filing for bankruptcy, talk to Bankruptcy Experts Melbourne on 1300 795 575 or visit their website for additional information: www.bankruptcyexpertsmelbourne.com.au