What Is It Like To Go Bankrupt?

Home/Bankrupt, Blog/What Is It Like To Go Bankrupt?

What Is It Like To Go Bankrupt?

There’s no question that bankruptcy isn’t the most desirable situation to be experiencing. There are some drastic financial consequences involved and it’s a very challenging and stressful process that will affect you financially for several years to come. Ending up in mountains of debt can come about faster than you think, and many people end up in this situation because of a wide range of factors. Not having the capacity to work resulting from illness is one of the most frequent reasons individuals file for bankruptcy. It’s not like they had any control over the situation, but being unable to pay their debts considering that they have no income is the hard reality they will have to face. Actually, 7,900 people in Australia declared 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. Indeed, 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 a lot of cases, bankruptcy is an opportunity for a fresh start for those that are unable to repay their debts.

While I’ve never been bankrupt personally, 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 grappling with financial difficulties and thinking about bankruptcy, this blog will detail what life is like after you declare bankruptcy.

You Will Not Be Completely Debt Free By Declaring Bankruptcy

Bankruptcy is pretty complicated, and there is a general misconception that all debts are cleared by filing for bankruptcy. This is certainly not the case. There are a range of debts that won’t be cleared, such as Centrelink debts, HECS debts, child support, court imposed fines (like speeding tickets), as well as money that is owed to an insurance provider resulting from a car accident where you were uninsured and at fault. But, declaring bankruptcy will remove debts such as credit cards, GST and tax, and unsecured personal loans. The fact is, you will still have debts to pay after you declare bankruptcy, but the most critical debts in many cases, such as credit cards, will be eliminated.

Feelings Of Remorse And Humiliation Are Regular

Bankruptcy is a demanding process and many individuals who declare bankruptcy have feelings of regret and shame; as if they’ve lost in life. This is normal, however it’s essential to overcome these emotions because the truth is, humans make errors, and bankruptcy is a way that you can go back to square one financially and get your life back on track. The sooner you recover from these feelings of self-loathing, the sooner you’ll be able to start the recovery process and create a plan of how you’re going to repay your outstanding debts and rebuild your credit history. Always remember, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit history, so it’s certainly 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 crucial that you start rebuilding your credit history by maintaining a regular 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 receive loans for secured assets like houses and cars, but your interest rates will be much higher due to your bad credit report. Whilst it’s not always appropriate to acquire 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 chance to acquire all sorts of loans again at competitive rates.

Life after filing for bankruptcy clearly isn’t easy, but the emotional relief that many people experience after starting the process definitely softens the blow. There are some significant financial penalties 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 facing financial difficulties, 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 linked with bankruptcy. It’s challenging, but it’s also not the end of the world. If you ‘d like to talk to someone about your financial condition, reach out to Bankruptcy Experts Shellharbour on 1300 795 575 for a confidential discussion, or alternatively visit their website for additional information: http://www.bankruptcyexpertsshellharbour.com.au

Sources:

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

 

By | 2017-11-21T05:36:10+00:00 August 8th, 2017|Bankrupt, Blog|0 Comments

About the Author: