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What Is It Like To Go Bankrupt?

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What Is It Like To Go Bankrupt?

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There’s no question that bankruptcy isn’t the ideal scenario to be experiencing. There are some serious financial repercussions involved and it’s a very complex and stressful process that will affect you financially for several years to come. Finding yourself in mountains of debt can materialise in the blink of an eye, and lots of individuals end up in this situation because of a number of factors. Not having the ability to work resulting from illness is one of the most common reasons individuals file for bankruptcy. It’s not like they had any control over the circumstances, but being unable to repay their debts given that they have no income is the hard reality they need to face. Actually, 7,900 individuals in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as uncommon as some people think. In my opinion, bankruptcy is neither good nor bad. Yes, those who file for bankruptcy have made some poor financial decisions and will reprimanded as necessary, but declaring bankruptcy is also the first step to financial freedom. Some folks struggle for years just to make ends meet, while their debts keep multiplying, so in most cases, bankruptcy is a chance for a new beginning for those individuals that are unable to repay their debts.

 

Although 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 underwent the process. If you’re enduring financial difficulties and considering bankruptcy, this article will detail what life is like after you declare bankruptcy.

 

You Won’t Be Completely Debt Free By Declaring Bankruptcy

 

Bankruptcy is relatively complicated, and there is a general misconception that all debts are cleared by declaring bankruptcy. This is certainly not the case. There are a range of debts that won’t be removed, including Centrelink debts, HECS debts, child support, court imposed fines (for example speeding tickets), and money that is owed to an insurance company arising from a car accident where you were uninsured and at fault. On the other hand, 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 most cases, such as credit cards, will be removed.

 

Feelings Of Guilt And Shame Are Standard

 

Bankruptcy is a demanding process and many individuals who file for bankruptcy have feelings of guilt and shame; as if they’ve lost in life. This is quite natural, however it’s essential 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 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 remaining 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 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 imperative that you start rebuilding your credit report by maintaining a stable 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 opportunity to secure loans for secured assets like houses and cars, but your interest rates will be much higher due to your poor credit rating. Though it’s not always sensible to attain loans straight away, it is possible. After seven years from the time you became bankrupt, your credit report will be clean, and you will have the option to obtain all forms of loans again at competitive rates.

 

Life after filing for bankruptcy surely isn’t easy, but the emotional relief that most people experience after beginning the process certainly softens the blow. There are some severe financial consequences 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 enduring financial distress, it’s always best to seek professional advice sooner rather than later. Whatever you do, don’t keep struggling financially for years because you fear the stigma connected with bankruptcy. It’s difficult, but it’s also not the end of the world. If you ‘d like to speak to someone about your financial situation, get in contact with Bankruptcy Experts Emerald on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: http://www.bankruptcyexpertsemerald.com.au

 

Sources:

 

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

 

By | 2017-10-05T02:06:15+00:00 August 8th, 2017|Article, Bankruptcy, Blog|0 Comments

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