There’s no doubt that bankruptcy isn’t the ideal situation to be grappling with. There are some severe financial consequences involved and it’s a very tough and stressful process that will affect you financially for a couple of years to come. Finding yourself in mountains of debt can transpire faster than you think, and many people find themselves in this situation as a result of a number of factors. Not being able to work due to illness is one of the most common reasons people declare bankruptcy. It’s not like they had any control over the circumstances, but being unable to pay off their debts given that they have no income is the hard reality they will have to face. In reality, 7,900 people in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as unusual 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 poor financial decisions and will punished appropriately, nonetheless filing for bankruptcy is also the first step to financial freedom. A great deal of folks struggle for years just to make ends meet, whilst their debts keep compounding, so in most cases, bankruptcy is a chance for a fresh start for individuals 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, the majority of people are better off and glad they underwent the process. If you’re grappling with financial distress and considering bankruptcy, this blog will illustrate what life is like after you file for bankruptcy.

You Will Not Be Completely Debt Free By Filing For Bankruptcy

Bankruptcy is rather complicated, and there is a general misconception that all debts are eliminated by declaring bankruptcy. This is certainly not the case. There are various debts that won’t be cleared, such as Centrelink debts, HECS debts, child support, court imposed fines (for example speeding tickets), and money that is owed to an insurance provider resulting from a car accident where you were uninsured and at fault. On the contrary, declaring bankruptcy will eliminate debts such as 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 substantial debts in many cases, such as credit cards, will be eliminated.

Feelings Of Guilt And Embarrassment Are Normal

Bankruptcy is a stressful process and lots of folks who file for bankruptcy have feelings of regret and humiliation; as if they’ve lost in life. This is common, however it’s vital to overcome these emotions because the fact is, humans make errors, and bankruptcy is a way that you can go back to square one financially and get your life back on the right track. The sooner you recover from these feelings of shame, the sooner you’ll be able to begin the recovery process and craft a plan of how you’re going to repay your remaining debts and rebuild your credit rating. Just remember, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit rating, so it’s certainly 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 important that you start rebuilding your credit history by maintaining a steady 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 receive loans for secured assets like houses and cars, but your interest rates will be much higher as a result of your bad credit history. Even though it’s not always advisable to obtain loans straight away, it is possible. After seven years from the time you became bankrupt, your credit rating will be clean, and you will have the chance to acquire all types 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 heavy financial consequences involved, but declaring bankruptcy is the first step towards financial freedom and securing a bright future for you and your family. If you’re enduring 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 fear the stigma linked with bankruptcy. It’s challenging, but it’s also not the end of the world. If you ‘d like to speak to someone about your financial state of affairs, get in contact with Bankruptcy Experts Albury on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: www.bankruptcyexpertsalbury.com.au

Sources:

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