What Is It Like To Go Bankrupt?

There’s no question that bankruptcy isn’t the best situation to be experiencing. There are some unpleasant financial consequences involved and it’s a very difficult and stressful process that will affect you financially for years to come. Finding yourself in mountains of debt can transpire very rapidly, and many individuals end up in this situation due to a number of factors. Not having the ability to work due to illness is one of the most frequent reasons why people file for bankruptcy. It’s not like they had any control over the circumstances, but being unable to pay their debts simply because they have no income is the hard reality they have to face. In fact, 7,900 people in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as uncommon as some people think. If you ask me, I think that bankruptcy is neither good nor bad. Indeed, those who file for bankruptcy have made some bad financial decisions and will punished as necessary, nonetheless declaring bankruptcy is also the first step to financial freedom. Some people struggle for years just to make ends meet, while their debts keep multiplying, so in a lot of cases, bankruptcy is an opportunity for a new beginning for those that are unable to repay their debts.

 

Even though I’ve never been bankrupt personally, I’ve witnessed the journey of many individuals who have and surprisingly, many people are better off and glad they underwent the process. If you’re dealing with financial problems and thinking about bankruptcy, this post will illustrate what life is like after you file for bankruptcy.

 

You Won’t Be Completely Debt Free By Declaring Bankruptcy

 

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

 

Feelings Of Guilt And Embarrassment Are Natural

 

Bankruptcy is a taxing process and many people who file for bankruptcy have feelings of guilt and embarrassment; as if they’ve lost in life. This is standard, however it’s critical to overcome these emotions because the truth is, humans make mistakes, and bankruptcy is a way that you can start a new beginning financially and get your life back on track. The sooner you recover from these feelings of embarrassment, the sooner you’ll be able to start the recovery process and create a plan of how you’re going to repay your remaining debts and rebuild your credit report. Keep in mind, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit rating, 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 vital that you start rebuilding your credit rating by maintaining a stable 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 opportunity to attain loans for secured assets like houses and cars, but your interest rates will be much higher due to your poor credit history. Though it’s not always appropriate to acquire loans straight away, it is possible. After seven years from the time you became bankrupt, your credit rating will be clean, and you will have the opportunity to secure all kinds of loans again at competitive rates.

 

Life after filing for bankruptcy clearly isn’t easy, but the emotional relief that most individuals experience after beginning the process certainly softens the blow. There are some heavy financial implications 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 confronting 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 connected with bankruptcy. It’s challenging, but it’s also not the end of the world. If you ‘d like to talk with someone about your financial position, contact Bankruptcy Experts Gold Coast on 1300 879 867 for a confidential discussion, or alternatively visit their website for additional information: http://www.bankruptcyexpertsgoldcoast.com.au

 

Sources:

 

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

 

By | 2017-08-07T05:34:01+00:00 August 7th, 2017|Article, bankruptcy, Blog|0 Comments

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