Bankruptcy is not a decision that should be taken lightly. There are some severe financial implications involved and your financial freedom will be restricted for many years to come. This doesn’t suggest that filing for bankruptcy is the end of the world though. It should really be thought of as the first step in securing a bright financial future for you and your family. Millions of individuals declare bankruptcy every year and most of them have the ability to buy homes, cars and attain credit cards after they’re discharged. Further to this, understanding what life is like after you have filed for bankruptcy will clearly give you insight into making better financial decisions in the future.
Fundamentally, once you have filed for bankruptcy, you relinquish control of your finances and assets to a Trustee in exchange for protection against potential lawsuits 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 three years) after which time you’ll become discharged, which signifies that the financial limitations you incurred during bankruptcy are lifted. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article aims 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 drawbacks of declaring bankruptcy is that you can’t leave the country while you’re undischarged unless you seek permission from your Trustee. To do this, you’ll have to provide a lot of information regarding your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel internationally without prior approval from your bankruptcy Trustee, and in many cases will increase the length of your undischarged bankruptcy to a minimum of five years rather than three.
You Will Be Offered Credit Immediately
One thing that surprises a lot of discharged bankrupts is that they will immediately be offered credit by a vast range of creditors. The explanation behind this is that you won’t have the capacity to file for bankruptcy again for an extended period of time, so creditors understand that they have a good chance of getting their money back if you secure a loan. In some cases, acquiring a loan and making timely repayments will help strengthen your credit score, which will assist you in the recovery process. But be wary, you don’t want to take every offer thrown in your direction as some loan providers are very dubious and include hidden fees and charges that can put you in debt again instantly. The key is to rebuild your credit score steadily.
Buying A Home Is Definitely Possible
There’s a general misconception that after you declare bankruptcy, you will no longer have the ability to secure credit for a mortgage. This is definitely not the case. Although bankruptcy will leave you with a poor credit history, you can still buy a home if you have the capacity to rebuild your credit within a few years, you pay all your bills on time, and you exhibit a responsible use of credit. Naturally, you won’t have the capacity to acquire a mortgage straight after you’re discharged, so it’s key to build your credit score carefully before even envisioning securing a home loan.
Check Your Credit Regularly
Most financial experts advise that discharged bankrupts should inspect their credit report at the very least twice a year. After initially declaring bankruptcy though, it’s essential that you inspect your credit report each month for at least the first six months into your bankruptcy. A number of creditors may still be demanding payments despite the fact that you are not required to make payments on any debts that were discharged in the bankruptcy process. So to prevent any further difficulties, it’s imperative that you monitor your credit report to ensure it’s correct and up to date.
Though bankruptcy isn’t the ideal position to be in, it doesn’t mean that your financial future is permanently restrained. There are some severe financial limitations imposed on individuals that file for bankruptcy, but after they become discharged and slowly rebuild their credit history, they’re completely capable of securing a bright financial future. Attaining home loans and other lines of credit will be possible a couple of years after discharge if the recovery process is well-planned and executed. For this reason, it’s vital that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is rather complicated and there are many factors to need to be taken into account to ensure a smooth recovery process. If you’re thinking about declaring bankruptcy, talk to Bankruptcy Experts Maitland on 1300 795 575 or visit their website for more details: www.bankruptcyexpertsmaitland.com.au