What Is It Like To Go Bankrupt?

What-Is-It-Like-To-Go-Bankrupt

 

There’s no question that bankruptcy isn’t a desirable scenario to be dealing with. There are some major financial penalties involved and it’s a very demanding and stressful process that will affect you financially for years to come. Ending up in mountains of debt can come about in a heartbeat, and many people end up in this situation because of a multitude of factors. Not having the ability to work resulting from illness is one of the most common reasons why people file for bankruptcy. It’s not like they had any control over the circumstances, but being unable to pay off their debts since they have no income is the hard reality they need to face. In truth, 7,900 individuals in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as uncommon as some people may believe. In my opinion, bankruptcy is neither good nor bad. Without a doubt, those who file for bankruptcy have made some poor financial decisions and will punished as necessary, nevertheless filing for bankruptcy is also the first step to financial freedom. Lots of folks struggle for years just to make ends meet, whilst their debts keep multiplying, so in most cases, bankruptcy is an opportunity for a fresh start for those people that are unable to repay their debts.

 

Though I’ve never been bankrupt myself, I’ve witnessed the journey of many people who have and surprisingly, most people are better off and glad they went through the process. If you’re enduring financial problems and considering bankruptcy, this article will illustrate 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 frequent misconception that all debts are removed by filing for bankruptcy. This is definitely not the case. There are various sorts of debts that won’t be cleared, including Centrelink debts, HECS debts, child support, court imposed fines (for instance speeding tickets), and money that is owed to an insurance company resulting from a car accident where you were uninsured and at fault. On the contrary, filing for bankruptcy will remove 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 notable debts in many cases, such as credit cards, will be cleared.

 

Feelings Of Guilt And Embarrassment Are Regular

 

Bankruptcy is a demanding process and lots of folks who file for bankruptcy have feelings of remorse and humiliation; as if they’ve lost in life. This is common, however it’s imperative to overcome these emotions because the fact 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 regret, the sooner you’ll be able to start the recovery process and work out a plan of how you’re going to repay your outstanding debts and rebuild your credit history. Don’t forget, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit history, so it’s definitely 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 crucial 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 chance to obtain loans for secured assets like houses and cars, but your interest rates will be much higher because of your bad credit rating. Even though it’s not always appropriate to obtain loans straight away, it is possible. After seven years from the time you became bankrupt, your credit history will be clean, and you will have the option to acquire all forms of loans again at competitive rates.

 

Life after declaring bankruptcy definitely isn’t easy, but the emotional relief that most people experience after beginning the process certainly softens the blow. There are some major financial penalties involved, but declaring bankruptcy is the first step towards financial freedom and securing a bright future for you and your family. If you’re encountering financial difficulties, it’s always best to seek professional advice sooner rather than later. Whatever you do, don’t keep struggling 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 speak with someone about your financial condition, reach out to Bankruptcy Experts Parramatta on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: www.bankruptcyexpertsparramatta.com.au

 

Sources:

 

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

 

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