What Is It Like To Go Bankrupt?

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What Is It Like To Go Bankrupt?

There’s no question that bankruptcy isn’t a desirable situation to be confronting. There are some drastic financial implications involved and it’s a very intricate and stressful process that will affect you financially for a couple of years to come. Ending up in mountains of debt can materialise in the blink of an eye, and lots of individuals find themselves in this situation as a result of a variety of factors. Not being able to work resulting from illness is one of the most common reasons why people declare bankruptcy. It’s not as if they had any control over the situation, but being unable to settle their debts considering that they have no income is the hard reality they must face. Actually, 7,900 individuals in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as rare as some people may think. In my opinion, bankruptcy is neither good nor bad. Of course, those who declare bankruptcy have made some poor financial decisions and will reprimanded as necessary, however declaring bankruptcy is also the first step to financial freedom. Lots of people struggle for years just to make ends meet, even though their debts keep worsening, so in most cases, bankruptcy is an opportunity for a clean slate for those individuals that are unable to repay their debts.

Though I’ve never been bankrupt personally, I’ve witnessed the journey of lots of people who have and surprisingly, lots of people are better off and glad they went through the process. If you’re experiencing financial problems and thinking about bankruptcy, this article will describe what life is like after you file for bankruptcy.

You Will Not Be Completely Debt Free By Declaring Bankruptcy

Bankruptcy is very complicated, and there is a frequent misconception that all debts are eliminated by declaring bankruptcy. This is certainly not the case. There are numerous debts that won’t be eliminated, including Centrelink debts, HECS debts, child support, court imposed fines (such as speeding tickets), as well as money that is owed to an insurance provider arising from a car accident where you were uninsured and at fault. On the other hand, declaring bankruptcy will eliminate debts such as credit cards, GST and tax, and unsecured personal loans. The reality is, you will still have debts to pay after you declare bankruptcy, but the most substantial debts in most cases, such as credit cards, will be eliminated.

Feelings Of Remorse And Humiliation Are Ordinary

Bankruptcy is an arduous process and most people who declare bankruptcy have feelings of regret and embarrassment; as if they’ve lost in life. This is natural, however it’s crucial to overcome these emotions because the reality is, humans make mistakes, 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 self-loathing, the sooner you’ll be able to begin the recovery process and create a plan of how you’re going to repay your outstanding debts and rebuild your credit report. Bear in mind, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit report, 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 necessary that you start rebuilding your credit history 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 attain loans for secured assets like houses and cars, but your interest rates will be much higher because of your poor credit rating. While it’s not always appropriate to acquire 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 secure all types of loans again at competitive rates.

Life after declaring bankruptcy surely isn’t easy, but the emotional relief that many individuals experience after starting the process certainly softens the blow. There are some serious 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 coping with 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’re afraid of the stigma linked 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 predicament, get in touch with Bankruptcy Experts Maitland on 1300 795 575 for a confidential discussion, or alternatively visit their website for additional information: http://www.bankruptcyexpertsmaitland.com.au

Sources:

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

 

By | 2018-07-05T00:06:13+00:00 August 7th, 2017|Bankrupt, blog|0 Comments

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