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 restrained for years to come. This doesn’t mean that declaring bankruptcy is the end of the world though. It should actually be regarded as the first step in securing a bright financial future for you and your family. Millions of people file for bankruptcy every year and most of them have the capacity to buy homes, cars and acquire credit cards after they’re discharged. Further to this, understanding what life is like after you have declared bankruptcy will definitely give you insight into making better financial decisions in the future.
Essentially, once you have filed for bankruptcy, you relinquish control of your finances and assets to a Trustee in exchange for protection against litigation that might be taken by your creditors. Once the legal process has been finalised, 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 restrictions 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 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 drawbacks of declaring bankruptcy is that you cannot exit the country while you’re undischarged unless you request permission from your Trustee. To do this, you’ll need to provide a lot of information regarding your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel internationally without prior approval from your bankruptcy Trustee, and in most cases will increase the length of your undischarged bankruptcy to a minimum of five years rather than three.
You Will Be Offered Credit Instantly
One thing that surprises many discharged bankrupts is that they will immediately be offered credit by a wide range of financial institutions. The reason behind this is that you won’t have the ability to file for bankruptcy again for an extended period of time, so creditors understand that they have a good chance of getting their money back if you secure a loan. In some cases, securing a loan and making timely repayments will help improve your credit score, which will assist you in the recovery process. But be mindful, 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 trick is to rebuild your credit history progressively.
Buying A Home Is Certainly Possible
There’s a typical misconception that when you file for bankruptcy, you will no longer have the chance to obtain credit for a mortgage. This is definitely not the case. Though bankruptcy will leave you with a poor credit rating, you can still purchase a home if you have the ability to rebuild your credit within a couple of years, you pay all your bills in a timely manner, and you demonstrate a responsible use of credit. Obviously, you won’t have the ability to acquire a mortgage straight after you’re discharged, so it’s vital to build your credit history intelligently before even contemplating securing a home loan.
Check Your Credit Regularly
Most financial experts recommend that discharged bankrupts should inspect their credit report around twice a year. After initially filing for bankruptcy though, it’s vital that you check your credit report every month for at least the first 6 months into your bankruptcy. Various creditors may still be demanding payments despite the fact that you are not required to make payments on any debts that were discharged in the bankruptcy process. So to steer clear of any further complications, it’s essential that you keep an eye on your credit report to make sure it’s correct and up to date.
Though bankruptcy isn’t the ideal situation to be in, it doesn’t mean that your financial future is permanently limited. There are some serious financial restrictions imposed on people that file for bankruptcy, but after they become discharged and slowly rebuild their credit rating, they’re completely capable of securing a bright financial future. Securing a mortgage and other credit lines will be possible a few years after discharge if the recovery process is well-planned and executed. Consequently, it’s critical that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is quite complicated and there are many factors to must be taken into account to ensure a smooth recovery process. If you’re thinking about filing for bankruptcy, speak with Bankruptcy Experts Ipswich on 1300 795 575 or visit their website for more details: www.bankruptcyexpertsipswich.com.au