What Is It Like To Go Bankrupt?
There’s no question that bankruptcy isn’t the most desirable scenario to be experiencing. There are some serious financial repercussions involved and it’s a very challenging and stressful process that will affect you financially for years to come. Ending up in mountains of debt can transpire faster than you think, and lots of individuals end up in this situation as a result of a wide variety of factors. Not being able to work resulting from illness is one of the most frequent reasons why people declare bankruptcy. It’s not like they had any control over the situation, but being unable to repay their debts because they have no income is the hard reality they need to face. In truth, 7,900 individuals in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people believe. In my opinion, bankruptcy is neither good nor bad. Certainly, those who declare bankruptcy have made some poor financial decisions and will penalised appropriately, however declaring bankruptcy is also the first step to financial freedom. Some individuals struggle for years just to make ends meet, while their debts keep multiplying, so in most cases, bankruptcy is a chance for a clean slate for people that are unable to repay their debts.
Even though I’ve never been bankrupt myself, I’ve witnessed the journey of lots of individuals who have and surprisingly, the majority of people are better off and glad they went through the process. If you’re facing financial problems and contemplating bankruptcy, this post will explain what life is like after you declare bankruptcy.
You Will Not Be Completely Debt Free By Filing For Bankruptcy
Bankruptcy is pretty complicated, and there is a typical misconception that all debts are cleared by declaring bankruptcy. This is certainly not the case. There are numerous debts that won’t be eliminated, including 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 liable. On the other hand, filing for bankruptcy will clear debts like credit cards, GST and tax, and unsecured personal loans. The fact is, you will still have debts to pay after you file for bankruptcy, but the most notable debts in many cases, such as credit cards, will be cleared.
Feelings Of Regret And Humiliation Are Natural
Bankruptcy is a stressful process and many people who declare bankruptcy have feelings of guilt and embarrassment; as if they’ve lost in life. This is common, however it’s important 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 humiliation, 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 history. Don’t forget, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit rating, so it’s certainly 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 essential that you start rebuilding your credit history 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 acquire loans for secured assets like houses and cars, but your interest rates will be much higher because of your poor credit history. Whilst it’s not always a good idea to acquire 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 option to secure all sorts of loans again at competitive rates.
Life after filing for bankruptcy definitely isn’t easy, but the emotional relief that many people experience after beginning the process certainly softens the blow. There are some heavy financial implications 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 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 associated with bankruptcy. It’s not easy, but it’s also not the end of the world. If you ‘d like to talk with someone about your financial condition, contact Bankruptcy Experts Melbourne on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: http://www.bankruptcyexpertsmelbourne.com.au