Bankruptcy is not a decision that should be taken lightly. There are some harsh financial repercussions involved and your financial freedom will be restricted for several years to come. This doesn’t mean 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 each year and most of them have the capacity 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 most definitely give you insight into making better financial decisions in the future.
In simple terms, once you have declared bankruptcy, you surrender control of your finances and assets to a Trustee in exchange for protection against legal proceeding that could be taken by your creditors. Once the legal process has been completed, you’ll be undischarged for a specific period of time (in most cases 3 years) after which time you’ll become discharged, which indicates that the financial constraints you suffered during bankruptcy are removed. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article intends to achieve is to give you an understanding of what happens after you file for bankruptcy and what options you’ll have after you become discharged.
You Can’t Leave The Country Without Permission
One of the restrictions of declaring bankruptcy is that you can’t exit the country while you’re undischarged unless you request permission from your Trustee. To do this, you’ll need to supply a lot of details regarding your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel internationally without prior consent from your bankruptcy Trustee, and in most cases will increase the duration of your undischarged bankruptcy to a minimum of five years as opposed to three.
You Will Be Offered Credit Immediately
One thing that surprises many discharged bankrupts is that they will immediately be offered credit by a vast range of loan providers. The main reason behind this is that you won’t have the ability to file for bankruptcy again for an extensive period of time, so creditors understand that they have a good chance of getting their money back if you secure a loan. Sometimes, securing a loan and making timely repayments will help strengthen your credit rating, which will aid you in the recovery process. But beware, 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 key is to rebuild your credit history gradually.
Buying A Home Is Certainly Possible
There’s a standard misconception that when you declare bankruptcy, you will no longer have the ability to attain credit for a home loan. This is definitely not the case. Although bankruptcy will leave you with a poor credit history, you can still purchase a home if you’re able 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. Naturally, you won’t be able to acquire a mortgage straight after you’re discharged, so it’s crucial to build your credit record intelligently before even considering securing a mortgage.
Check Your Credit Regularly
Most financial specialists advise that discharged bankrupts should inspect their credit report about twice a year. After initially declaring bankruptcy though, it’s crucial that you inspect your credit report each month for at least the first 6 months into your bankruptcy. Certain creditors may still be requesting payments even though you are not required to make payments on any debts that were discharged in the bankruptcy process. So to stay clear of any further complications, it’s necessary that you keep track of your credit report to ensure it’s correct and up to date.
Whilst bankruptcy isn’t the most ideal position to be in, it doesn’t mean that your financial future is permanently limited. There are some severe financial limitations imposed on individuals that declare bankruptcy, but after they become discharged and slowly rebuild their credit rating, they’re perfectly capable of securing a bright financial future. Securing 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 quite complicated and there are many factors to should be considered to ensure a smooth recovery process. If you’re thinking about filing for bankruptcy, speak with Bankruptcy Experts Fremantle on 1300 795 575 or visit their website for additional information: www.bankruptcyexpertsfremantle.com.au