Bankruptcy is not a decision that should be taken lightly. There are some major financial consequences involved and your financial freedom will be constrained 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 declare bankruptcy each year and most of them are able to buy homes, cars and acquire credit cards after they’re discharged. Along with this, understanding what life is like after you have declared bankruptcy will evidently give you insight into making better financial decisions in the future.
In a nutshell, once you have declared bankruptcy, you surrender 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 finalised, you’ll be undischarged for a specific 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 removed. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article strives 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 request permission from your Trustee. To do this, you’ll need 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 to another country without prior consent from your bankruptcy Trustee, and in most cases will increase the length of your undischarged bankruptcy to a minimum of five years rather than three.
You Will Be Offered Credit Instantly
One thing that surprises plenty of discharged bankrupts is that they will immediately be offered credit by a variety of creditors. The main reason behind this is that you won’t have the ability to declare bankruptcy again for an extensive period of time, so creditors understand that they have a good chance of getting their money back if you secure a loan. In some situations, securing a loan and making timely repayments will help improve your credit history, which will aid you in the recovery process. But be warned, you don’t want to accept every offer thrown in your direction as some financial institutions 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 rating gradually.
Buying A Home Is Definitely Possible
There’s a frequent misconception that when you file for bankruptcy, you will no longer have the capacity to secure credit for a home loan. This is definitely not the case. Whilst bankruptcy will leave you with a bad credit rating, you can still purchase a home if you have the ability to rebuild your credit within a few years, you pay all your bills in a timely manner, and you demonstrate a responsible use of credit. Naturally, you won’t be able to obtain a mortgage straight after you’re discharged, so it’s important to build your credit history carefully before even envisioning securing a mortgage.
Check Your Credit Frequently
Most financial specialists advise that discharged bankrupts should examine their credit report around twice a year. After initially declaring bankruptcy though, it’s essential that you examine your credit report each month for at least the first 6 months into your bankruptcy. A couple of 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 steer clear of any further complications, it’s critical that you keep an eye on your credit report to make sure that it’s accurate and up to date.
Though bankruptcy isn’t the preferred 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 declare bankruptcy, but after they become discharged and slowly rebuild their credit rating, they’re perfectly capable of securing a bright financial future. Acquiring 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. Consequently, it’s essential 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 taken into account to ensure a smooth recovery process. If you’re considering declaring bankruptcy, talk with Bankruptcy Experts Emerald on 1300 795 575 or visit their website for more information: www.bankruptcyexpertsemerald.com.au