What Is It Like To Go Bankrupt?

There’s no doubt that bankruptcy isn’t the best scenario to be grappling with. There are some major financial implications involved and it’s a very intricate and stressful process that will affect you financially for a couple of years to come. Finding yourself in mountains of debt can happen very rapidly, and many individuals find themselves in this situation as a result of a wide range of factors. Not having the ability to work resulting from illness is one of the most frequent reasons why people declare bankruptcy. It’s not like they had any control over the circumstances, but being unable to pay their debts simply because they have no income is the hard reality they will have to face. In truth, 7,900 individuals in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people believe. In my opinion, bankruptcy is neither good nor bad. Certainly, those who declare bankruptcy have made some bad financial decisions and will punished as necessary, but declaring bankruptcy is also the first step to financial freedom. Some folks struggle for years just to make ends meet, whilst their debts keep worsening, so in most cases, bankruptcy is a chance for a new beginning for those individuals that are unable to repay their debts.

 

Even though I’ve never been bankrupt personally, I’ve witnessed the journey of lots of individuals who have and surprisingly, most people are better off and glad they went through the process. If you’re dealing with financial hardship and contemplating bankruptcy, this article will describe what life is like after you file for bankruptcy.

 

You Will Not Be Completely Debt Free By Declaring Bankruptcy

 

Bankruptcy is considerably complicated, and there is a frequent misconception that all debts are cleared by declaring bankruptcy. This is definitely not the case. There are a range of debts that won’t be removed, for instance Centrelink debts, HECS debts, child support, court imposed fines (for instance speeding tickets), and also money that is owed to an insurance company resulting from a car accident where you were uninsured and liable. On the other hand, declaring bankruptcy will remove debts like credit cards, GST and tax, and unsecured personal loans. The fact is, you will still have debts to pay after you declare bankruptcy, but the most significant debts in most cases, such as credit cards, will be eliminated.

 

Feelings Of Regret And Embarrassment Are Ordinary

 

Bankruptcy is a demanding process and many individuals who declare bankruptcy have feelings of remorse and shame; as if they’ve lost in life. This is natural, however it’s critical 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 track. The sooner you recover from these feelings of self-loathing, the sooner you’ll be able to start the recovery process and create a plan of how you’re going to repay your outstanding debts and rebuild your credit rating. Remember, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit history, so it’s definitely 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 necessary that you start rebuilding your credit history by maintaining a stable 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 opportunity to secure loans for secured assets like houses and cars, but your interest rates will be much higher due to your poor credit report. Even though it’s not always appropriate to acquire loans straight away, it is possible. After seven years from the time you became bankrupt, your credit history will be clean, and you will have the option to acquire all types of loans again at competitive rates.

 

Life after filing for bankruptcy definitely isn’t easy, but the emotional relief that most people experience after starting the process certainly softens the blow. There are some considerable 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 encountering 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’re afraid of the stigma linked with bankruptcy. It’s challenging, but it’s also not the end of the world. If you ‘d like to talk to someone about your financial predicament, reach out to Bankruptcy Experts Ipswich on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: http://www.bankruptcyexpertsipswich.com.au

 

Sources:

 

https://www.afsa.gov.au/statistics/personal-insolvency-statistics-0