What Is It Like To Go Bankrupt?

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What Is It Like To Go Bankrupt?

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There’s no question that bankruptcy isn’t a desirable situation to be confronting. There are some severe financial penalties involved and it’s a very exhausting and stressful process that will affect you financially for a couple of years to come. Finding yourself in mountains of debt can materialise in a heartbeat, and lots of individuals find themselves in this situation as a result of a multitude of factors. Not having the opportunity to work resulting from illness is one of the most common reasons individuals file for bankruptcy. It’s not as if they had any control over the situation, but being unable to settle their debts simply because they have no income is the hard reality they must face. Actually, 7,900 people in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people may believe. If you ask me, I think that bankruptcy is neither good nor bad. Yes, those who file for bankruptcy have made some bad financial decisions and will punished as necessary, nevertheless filing for bankruptcy is also the first step to financial freedom. A great deal of people struggle for years just to make ends meet, while their debts keep multiplying, so in a lot of cases, bankruptcy is an opportunity for a new beginning for people that are unable to repay their debts.

Whilst I’ve never been bankrupt myself, I’ve witnessed the journey of many people who have and surprisingly, many people are better off and glad they underwent the process. If you’re enduring financial difficulties and thinking about bankruptcy, this post will detail what life is like after you declare bankruptcy.

 

You Will Not Be Completely Debt Free By Filing For Bankruptcy

Bankruptcy is pretty complicated, and there is a general misconception that all debts are cleared by declaring bankruptcy. This is certainly not the case. There are several debts that won’t be eliminated, for example Centrelink debts, HECS debts, child support, court imposed fines (like speeding tickets), as well as money that is owed to an insurance company resulting from a car accident where you were uninsured and at fault. Alternatively, filing for bankruptcy will eliminate debts like credit cards, GST and tax, and unsecured personal loans. The fact is, you will still have debts to pay after you file for bankruptcy, but the most substantial debts in most cases, such as credit cards, will be eliminated.

 

Feelings Of Guilt And Embarrassment Are Ordinary

Bankruptcy is a demanding process and most people who file for bankruptcy have feelings of regret and embarrassment; as if they’ve lost in life. This is quite normal, however it’s critical to overcome these emotions because the reality is, humans make mistakes, 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 begin the recovery process and work out a plan of how you’re going to repay your remaining 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 filing for bankruptcy you won’t be able to borrow any money under any circumstances for three years. During this time, it’s critical that you start rebuilding your credit report by maintaining a steady 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 sensible to attain 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 opportunity to acquire all sorts of loans again at competitive rates.

Life after declaring bankruptcy certainly isn’t easy, but the emotional relief that most individuals experience after starting the process certainly softens the blow. There are some considerable financial penalties involved, but declaring bankruptcy is the first step towards financial freedom and securing a bright future for you and your family. If you’re confronting financial difficulties, it’s always best to seek professional advice sooner rather than later. Whatever you do, don’t keep battling financially for years because you fear the stigma associated 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 state of affairs, get in touch with Bankruptcy Experts Lismore on 1300 795 575 for a confidential discussion, or alternatively visit their website for additional information: www.bankruptcyexpertslismore.com.au

 

Sources:

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

 

By | 2017-10-12T23:37:41+00:00 August 7th, 2017|article, bankruptcy, blog|0 Comments

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