What Is It Like To Go Bankrupt?
There’s no question that bankruptcy isn’t the ideal scenario to be facing. There are some major financial implications involved and it’s a very exhausting and stressful process that will affect you financially for several years to come. Ending up in mountains of debt can happen in the blink of an eye, and lots of people find themselves in this situation as a result of a variety of factors. Not having the opportunity to work due to illness is one of the most frequent reasons individuals declare bankruptcy. It’s not like they had any control over the circumstances, but being unable to settle their debts given that they have no income is the hard reality they have to face. In reality, 7,900 people in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people may think. In my opinion, bankruptcy is neither good nor bad. Of course, those who declare bankruptcy have made some bad financial decisions and will penalised as necessary, nevertheless declaring bankruptcy is also the first step to financial freedom. A great deal of individuals struggle for years just to make ends meet, even though their debts keep compounding, so in a lot of cases, bankruptcy is an opportunity for a new beginning for individuals that are unable to repay their debts.
Whilst I’ve never been bankrupt personally, I’ve witnessed the journey of many people who have and surprisingly, most individuals are better off and glad they went through the process. If you’re grappling with financial distress and contemplating bankruptcy, this blog will illustrate what life is like after you declare bankruptcy.
You Won’t Be Completely Debt Free By Filing For Bankruptcy
Bankruptcy is quite complicated, and there is a typical misconception that all debts are removed by declaring bankruptcy. This is certainly not the case. There are numerous debts that won’t be cleared, for instance Centrelink debts, HECS debts, child support, court imposed fines (such as speeding tickets), and also money that is owed to an insurance provider resulting from a car accident where you were uninsured and in the wrong. Alternatively, declaring bankruptcy will remove 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 substantial debts in many cases, such as credit cards, will be cleared.
Feelings Of Guilt And Shame Are Natural
Bankruptcy is a stressful process and many individuals who declare bankruptcy have feelings of remorse and shame; as if they’ve lost in life. This is quite natural, however it’s vital 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 regret, the sooner you’ll be able to start the recovery process and craft a plan of how you’re going to repay your remaining debts and rebuild your credit history. Remember, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit history, 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 vital 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 as a result of your bad credit rating. Whilst it’s not always appropriate to attain 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 forms of loans again at competitive rates.
Life after filing for bankruptcy clearly isn’t easy, but the emotional relief that many individuals experience after starting the process definitely softens the blow. There are some serious 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 enduring financial difficulties, it’s always best to seek professional advice sooner rather than later. Whatever you do, don’t keep struggling financially for years because you fear the stigma associated with bankruptcy. It’s difficult, but it’s also not the end of the world. If you ‘d like to speak with someone about your financial position, reach out to Bankruptcy Experts Joondalup on 1300 795 575 for a confidential discussion, or alternatively visit their website for additional information: www.bankruptcyexpertsjoondalup.com.au