What Happens After You Declare Bankruptcy
Bankruptcy is not a decision that should be taken lightly. There are some severe financial consequences involved and your financial freedom will be confined for many years to come. This doesn’t imply that declaring bankruptcy is the end of the world though. It should really be regarded as the first step in securing a bright financial future for you and your family. Millions of people declare bankruptcy each year and the majority of them are able 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 undoubtedly give you insight into making better financial decisions in the future.
Essentially, once you have filed for bankruptcy, you give up control of your finances and assets to a Trustee for protection against potential lawsuits that might be taken by your creditors. Once the legal process has been completed, you’ll be undischarged for a specific period of time (in most cases 3 years) after which time you’ll become discharged, which implies that the financial stipulations you suffered during bankruptcy are lifted. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article strives 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 disadvantages of declaring bankruptcy is that you can’t exit the country while you’re undischarged only if you seek permission from your Trustee. To do this, you’ll need to supply a lot of information regarding your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel abroad without prior consent from your bankruptcy Trustee, and in most cases will increase the duration of your undischarged bankruptcy to at least five years as opposed to 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 variety of loan providers. The reason behind this is that you won’t have the ability to declare bankruptcy again for a long period of time, so creditors understand that they have a good chance of getting their money back if you secure a loan. In some situations, securing a loan and making timely repayments will help strengthen your credit score, which will assist you in the recovery process. But be cautious, you don’t want to accept every offer thrown in your direction as some lending institutions are very dubious and include hidden fees and charges that can put you in debt again immediately. The key is to rebuild your credit score slowly.
Buying A Home Is Definitely Possible
There’s a general misconception that whenever you file for bankruptcy, you will no longer be able to obtain credit for a mortgage. This is certainly not the case. Although bankruptcy will leave you with a poor credit rating, you can still purchase a home if you’re able to rebuild your credit within a few years, you pay all your bills on time, and you demonstrate a responsible use of credit. Obviously, you won’t have the ability to get a home loan straight after you’re discharged, so it’s very important to build your credit rating intelligently before even envisioning securing a home loan.
Check Your Credit Regularly
Most financial experts advise that discharged bankrupts should examine their credit report about twice a year. After initially declaring bankruptcy though, it’s paramount that you examine your credit report every month for at least the first six months into your bankruptcy. A number of creditors may still be demanding payments even though you are not required to make payments on any debts that were discharged in the bankruptcy process. So to steer clear of any further difficulties, it’s critical that you keep an eye on your credit report to ensure it’s correct and up to date.
Although bankruptcy isn’t the preferred position to be in, it doesn’t mean that your financial future is permanently constrained. There are some serious financial constraints imposed on individuals that file for bankruptcy, but after they become discharged and slowly rebuild their credit history, they’re completely capable of securing a bright financial future. Acquiring home loans and other lines of credit will be possible a few years after discharge if the recovery process is well-planned and executed. Therefore, it’s vital that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is rather complicated and there are many factors to have to be taken into account to ensure a smooth recovery process. If you’re considering filing for bankruptcy, talk with Bankruptcy Experts Joondalup on 1300 795 575 or visit their website for more details: www.bankruptcyexpertsjoondalup.com.au