What Is It Like To Go Bankrupt?

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What Is It Like To Go Bankrupt?

There’s no doubt that bankruptcy isn’t the ideal scenario to be experiencing. There are some major financial implications 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 come about very quickly, and many individuals end up in this situation because of a number of factors. Not being able to work resulting from illness is one of the most frequent reasons people declare bankruptcy. It’s not as if they had any control over the situation, but being unable to settle their debts since they have no income is the hard reality they will have to face. As a matter of fact, 7,900 individuals in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as uncommon as some people think. 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 reprimanded accordingly, nevertheless declaring bankruptcy is also the first step to financial freedom. Some folks struggle for years just to make ends meet, even though their debts keep multiplying, so in most cases, bankruptcy is a chance for a new beginning for people that are unable to repay their debts.

 

Even though 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 grappling with financial problems and contemplating bankruptcy, this blog will outline what life is like after you declare bankruptcy.

 

You Will Not Be Completely Debt Free By Declaring Bankruptcy

 

Bankruptcy is considerably complicated, and there is a common misconception that all debts are cleared by declaring bankruptcy. This is definitely not the case. There are various sorts of debts that won’t be eliminated, for example Centrelink debts, HECS debts, child support, court imposed fines (such as speeding tickets), and also money that is owed to an insurance company arising from a car accident where you were uninsured and liable. Alternatively, filing for bankruptcy will clear debts like credit cards, GST and tax, and unsecured personal loans. The reality is, you will still have debts to pay after you file for bankruptcy, but the most serious debts in many cases, such as credit cards, will be cleared.

 

Feelings Of Remorse And Shame Are Natural

 

Bankruptcy is a taxing process and most people who declare bankruptcy have feelings of remorse and embarrassment; as if they’ve lost in life. This is quite natural, however it’s paramount 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 track. The sooner you recover from these feelings of remorse, the sooner you’ll be able to begin the recovery process and develop a plan of how you’re going to repay your outstanding debts and rebuild your credit history. 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 filing for bankruptcy you won’t be able to borrow any money under any circumstances for three years. During this time, it’s essential that you start rebuilding your credit history by maintaining a regular income and paying your bills and remaining debts on time. It’s simple but effective. After this three-year process, you become a discharged bankrupt and will have the option to secure loans for secured assets like houses and cars, but your interest rates will be much higher as a result of your bad credit rating. Even though it’s not always a good idea to acquire 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 chance to obtain all kinds of loans again at competitive rates.

 

Life after declaring bankruptcy definitely isn’t easy, but the emotional relief that most people experience after starting the process certainly softens the blow. There are some heavy 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 dealing with financial problems, it’s always best to seek professional advice sooner rather than later. Whatever you do, don’t keep battling financially for years because you’re afraid of the stigma related to bankruptcy. It’s challenging, but it’s also not the end of the world. If you ‘d like to talk with someone about your financial position, get in contact with Bankruptcy Experts Fremantle on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: http://www.bankruptcyexpertsfremantle.com.au

 

Sources:

 

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

 

By | 2017-08-07T05:00:30+00:00 August 7th, 2017|article, Bankruptcy, Blog|0 Comments

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