Bankruptcy is not a decision that should be taken lightly. There are some heavy financial consequences involved and your financial freedom will be limited for years to come. This doesn’t mean that filing for bankruptcy is the end of the world though. It should really be considered as the first step in securing a bright financial future for you and your family. Millions of individuals file for bankruptcy each year and most of them have the ability to buy homes, cars and obtain credit cards after they’re discharged. Along with this, understanding what life is like after you have declared bankruptcy will undoubtedly give you insight into making better financial decisions in the future.
In a nutshell, once you have filed for bankruptcy, you forfeit control of your finances and assets to a Trustee for protection against litigation that may be taken by your creditors. Once the legal process has been completed, you’ll be undischarged for a certain period of time (in most cases 3 years) after which time you’ll become discharged, which indicates that the financial restraints 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 declare 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 cannot exit the country while you’re undischarged unless you request 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 overseas without prior consent from your bankruptcy Trustee, and in many cases will increase the length of your undischarged bankruptcy to a minimum of five years instead of three.
You Will Be Offered Credit Right Away
One thing that surprises a lot of discharged bankrupts is that they will immediately be offered credit by a wide variety of lenders. The main reason behind this is that you won’t have the ability to declare bankruptcy again for a lengthy period of time, so lenders understand that they have a good chance of getting their money back if you secure a loan. Occasionally, acquiring a loan and making timely repayments will help strengthen your credit score, which will aid you in the recovery process. But be wary, you don’t want to accept every offer thrown in your direction as some lenders are very dubious and include hidden fees and charges that can put you in debt again straight away. The key is to rebuild your credit score progressively.
Buying A Home Is Certainly Possible
There’s a general misconception that after you declare bankruptcy, you will no longer have the opportunity to secure credit for a home loan. This is certainly not the case. Although bankruptcy will leave you with a bad 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. Needless to say, you won’t be able to get a home loan straight after you’re discharged, so it’s essential to build your credit record wisely before even thinking about securing a home loan.
Check Your Credit Frequently
Most financial experts recommend that discharged bankrupts should take a look at their credit report about twice a year. After initially declaring bankruptcy though, it’s necessary that you inspect your credit report each month for at least the first six months into your bankruptcy. A few creditors may still be requesting payments even though you are not required to make payments on any debts that were discharged in the bankruptcy process. So to stay clear of any further difficulties, it’s imperative that you keep track of your credit report to make sure it’s correct and up to date.
Although bankruptcy isn’t the preferred situation to be in, it doesn’t mean that your financial future is permanently restricted. There are some serious financial limitations imposed on people that file for bankruptcy, but after they become discharged and slowly rebuild their credit rating, they’re completely capable of securing a bright financial future. Obtaining a mortgage and other credit lines will be possible a couple of years after discharge if the recovery process is well-planned and executed. Thus, it’s critical that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is very complicated and there are many factors to should be considered to ensure a smooth recovery process. If you’re thinking of filing for bankruptcy, contact Bankruptcy Experts Parramatta on 1300 795 575 or visit their website for more information: www.bankruptcyexpertsparramatta.com.au