August 8, 2017Comments Closed

What Is It Like To Go Bankrupt?

Posted by:admin onAugust 8, 2017

Bankruptcy Experts Mount Isa

There’s no doubt that bankruptcy isn’t the ideal scenario to be dealing with. There are some harsh financial consequences involved and it’s a very difficult and stressful process that will affect you financially for several years to come. Finding yourself in mountains of debt can come about very quickly, and many people find themselves in this situation due to a variety 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 situation, but being unable to pay off their debts considering that they have no income is the hard reality they will have to face. In reality, 7,900 people in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as uncommon as some people may think. If you ask me, I think that bankruptcy is neither good nor bad. Yes, those who declare bankruptcy have made some bad financial decisions and will reprimanded accordingly, nonetheless declaring bankruptcy is also the first step to financial freedom. Many people struggle for years just to make ends meet, whilst their debts keep worsening, so in many cases, bankruptcy is a chance for a fresh start for individuals that are unable to repay their debts.

Whilst I’ve never been bankrupt myself, I’ve witnessed the journey of lots of individuals who have and surprisingly, most individuals are better off and glad they went through the process. If you’re facing financial problems and considering bankruptcy, this article will describe what life is like after you file for bankruptcy.

You Won’t Be Debt Free By Declaring Bankruptcy

Bankruptcy is very complicated, and there is a typical misconception that all debts are cleared by filing for bankruptcy. This is definitely not the case. There are various debts that won’t be removed, such as Centrelink debts, HECS debts, child support, court imposed fines (like speeding tickets), and also money that is owed to an insurance provider resulting from a car accident where you were uninsured and at fault. But, declaring bankruptcy will clear debts like 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 eliminated.

Feelings Of Regret And Humiliation Are Normal

Bankruptcy is a taxing process and most people who file for bankruptcy have feelings of guilt and shame; as if they’ve lost in life. This is quite standard, however it’s necessary to overcome these emotions because the fact is, humans make errors, 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 guilt, the sooner you’ll be able to begin the recovery process and develop a plan of how you’re going to repay your remaining debts and rebuild your credit rating. Bear in mind, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit rating, so it’s definitely not the end of the world.

You Can’t Borrow Any Money For Three Years

Unfortunately, by filing for bankruptcy you won’t be able to borrow any money under any circumstances for three years. During this time, it’s essential that you start rebuilding your credit history by maintaining a consistent 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 option to acquire loans for secured assets like houses and cars, but your interest rates will be much higher due to your poor credit history. Although 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 opportunity to obtain all types of loans again at competitive rates.

Life after declaring bankruptcy obviously isn’t easy, but the emotional relief that many people experience after starting the process definitely softens the blow. There are some serious financial repercussions 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 distress, it’s always best to seek professional advice sooner rather than later. Whatever you do, don’t keep battling financially for years because you fear the stigma associated with bankruptcy. It’s not easy, 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 Mount Isa on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: http://www.bankruptcyexpertsmountisa.com.au

Sources:

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

 

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