There’s no question that bankruptcy isn’t the best scenario to be confronting. There are some unpleasant financial consequences involved and it’s a very difficult and stressful process that will affect you financially for years to come. Ending up in mountains of debt can transpire very rapidly, and lots of individuals end up in this situation due to a wide range of factors. Not being able to work due to illness is one of the most common reasons why individuals declare bankruptcy. It’s not like they had any control over the circumstances, but being unable to pay their debts since they have no income is the hard reality they must face. Actually, 7,900 individuals in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people believe. If you ask me, I think that bankruptcy is neither good nor bad. Certainly, those who file for bankruptcy have made some poor financial decisions and will reprimanded as necessary, but filing for bankruptcy is also the first step to financial freedom. Many people struggle for years just to make ends meet, while their debts keep compounding, so in many cases, bankruptcy is a chance for a clean slate for people that are unable to repay their debts.

 

Whilst I’ve never been bankrupt myself, I’ve witnessed the journey of lots of people who have and surprisingly, the majority of people are better off and glad they underwent the process. If you’re dealing with financial distress and contemplating bankruptcy, this blog will summarise what life is like after you file for bankruptcy.

 

You Won’t Be Completely Debt Free By Declaring Bankruptcy

 

Bankruptcy is pretty complicated, and there is a typical misconception that all debts are removed by declaring bankruptcy. This is definitely not the case. There are various debts that won’t be removed, such as Centrelink debts, HECS debts, child support, court imposed fines (for instance speeding tickets), as well as money that is owed to an insurance company arising from a car accident where you were uninsured and liable. On the other hand, declaring bankruptcy will clear debts like credit cards, GST and tax, and unsecured personal loans. The truth is, you will still have debts to pay after you declare bankruptcy, but the most significant debts in many cases, such as credit cards, will be removed.

 

Feelings Of Regret And Embarrassment Are Normal

 

Bankruptcy is a demanding process and many individuals who declare bankruptcy have feelings of guilt and shame; as if they’ve lost in life. This is quite common, however it’s crucial to overcome these emotions because the truth is, humans make errors, and bankruptcy is a way that you can start a new beginning 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 start the recovery process and work out 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 report, so it’s certainly 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 critical 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 receive loans for secured assets like houses and cars, but your interest rates will be much higher as a result of your bad credit rating. While it’s not always appropriate to obtain 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 sorts of loans again at competitive rates.

 

Life after filing for bankruptcy surely isn’t easy, but the emotional relief that many people experience after starting the process definitely softens the blow. There are some heavy 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 facing 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 linked with bankruptcy. It’s difficult, but it’s also not the end of the world. If you ‘d like to talk to someone about your financial predicament, get in touch with Bankruptcy Experts Rockhampton on 1300 795 575 for a confidential discussion, or alternatively visit their website for more details: http://www.bankruptcyexpertsrockhampton.com.au

 

Sources:

 

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