What Happens After You File For Bankruptcy
Bankruptcy is not a decision that should be taken lightly. There are some harsh financial implications involved and your financial freedom will be limited for many years to come. This doesn’t indicate that filing for bankruptcy is the end of the world though. It should really be considered as the first step in securing a bright financial future for you and your family. Millions of people declare bankruptcy every year and the majority of them have the ability to buy homes, cars and attain credit cards after they’re discharged. Along with this, understanding what life is like after you have filed for bankruptcy will certainly give you insight into making better financial decisions in the future.
In simple terms, once you have filed for bankruptcy, you surrender control of your finances and assets to a Trustee for protection against legal action that may 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 3 years) after which time you’ll become discharged, which signifies that the financial limitations you sustained during bankruptcy are lifted. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article aspires 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 drawbacks of declaring bankruptcy is that you cannot leave the country while you’re undischarged only if you request 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 overseas without prior consent 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 many discharged bankrupts is that they will immediately be offered credit by a variety of lending institutions. The explanation behind this is that you won’t have the capacity to file for 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 certain situations, obtaining a loan and making timely repayments will help improve your credit score, which will aid you in the recovery process. But beware, you don’t want to accept every offer thrown in your direction as some lenders are very dubious and include hidden fees and charges that can put you in debt again straight away. The key is to rebuild your credit history progressively.
Buying A Home Is Definitely Possible
There’s a regular misconception that when you declare bankruptcy, you will no longer be able to secure credit for a home loan. This is certainly not the case. Although bankruptcy will leave you with a bad credit rating, you can still buy a home if you have the ability 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. Of course, you won’t be able to get a mortgage straight after you’re discharged, so it’s key to build your credit record carefully before even contemplating securing a mortgage.
Check Your Credit On A Regular Basis
Most financial specialists recommend that discharged bankrupts should check their credit report around twice a year. After initially declaring bankruptcy though, it’s paramount that you take a look at your credit report each month for at least the first six months into your bankruptcy. A couple 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 minimise any further difficulties, it’s paramount that you monitor your credit report to make sure that it’s accurate and up to date.
Though bankruptcy isn’t the preferred situation to be in, it doesn’t mean that your financial future is permanently constrained. There are some serious financial limitations imposed on people that declare bankruptcy, but after they become discharged and slowly rebuild their credit history, they’re perfectly capable of securing a bright financial future. Obtaining a mortgage and other lines of credit will be possible a couple of years after discharge if the recovery process is well-planned and implemented. For this reason, it’s paramount that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is considerably complicated and there are many factors to must be taken into account to ensure a smooth recovery process. If you’re contemplating declaring bankruptcy, talk with Bankruptcy Experts Newcastle on 1300 795 575 or visit their website for more information: www.bankruptcyexpertsnewcastle.com.au