What Is It Like To Go Bankrupt?
There’s no question that bankruptcy isn’t the best scenario to be grappling with. There are some harsh financial repercussions involved and it’s a very challenging and stressful process that will affect you financially for several years to come. Ending up in mountains of debt can materialise in the blink of an eye, and many individuals end up in this situation as a result of a multitude of factors. Not having the capacity to work resulting from illness is one of the most common reasons why individuals declare bankruptcy. It’s not as if they had any control over the situation, but being unable to repay their debts since 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 rare as some people may believe. In my opinion, bankruptcy is neither good nor bad. Without a doubt, those who file for bankruptcy have made some bad financial decisions and will reprimanded accordingly, nevertheless filing for bankruptcy is also the first step to financial freedom. Lots of individuals struggle for years just to make ends meet, whilst their debts keep compounding, so often times, bankruptcy is a chance for a clean slate for individuals that are unable to repay their debts.
Although I’ve never been bankrupt myself, I’ve witnessed the journey of lots of individuals who have and surprisingly, lots of people are better off and glad they underwent the process. If you’re dealing with financial distress and thinking about bankruptcy, this post will illustrate what life is like after you declare bankruptcy.
You Won’t Be Debt Free By Declaring Bankruptcy
Bankruptcy is rather complicated, and there is a general misconception that all debts are cleared by declaring bankruptcy. This is certainly not the case. There are various sorts of debts that won’t be cleared, including 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 at fault. But, declaring bankruptcy will clear debts such as credit cards, GST and tax, and unsecured personal loans. The truth is, you will still have debts to pay after you file for bankruptcy, but the most significant debts in most cases, such as credit cards, will be removed.
Feelings Of Regret And Shame Are Natural
Bankruptcy is an arduous process and lots of people who declare bankruptcy have feelings of remorse and humiliation; as if they’ve lost in life. This is quite normal, however it’s vital to overcome these emotions because the reality 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 self-loathing, the sooner you’ll be able to start the recovery process and develop a plan of how you’re going to repay your outstanding debts and rebuild your credit rating. Keep in mind, 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 paramount that you start rebuilding your credit rating 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 option to obtain loans for secured assets like houses and cars, but your interest rates will be much higher as a result of your poor credit history. Though it’s not always appropriate to secure 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 types 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 serious financial penalties 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 experiencing financial distress, 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 related to 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 circumstances, get in contact with Bankruptcy Experts Newcastle on 1300 795 575 for a confidential discussion, or alternatively visit their website for additional information: http://www.bankruptcyexpertsnewcastle.com.au