There’s no question that bankruptcy isn’t the most desirable situation to be confronting. There are some severe financial consequences involved and it’s a very exhausting and stressful process that will affect you financially for a couple of years to come. Finding yourself in mountains of debt can come about very quickly, and many individuals end up in this situation as a result of a number of factors. Not having the opportunity to work resulting from illness is one of the most common reasons people declare bankruptcy. It’s not like they had any control over the situation, but being unable to settle their debts simply because they have no income is the hard reality they need to face. Actually, 7,900 people in Australia filed for 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. Certainly, those who declare bankruptcy have made some bad financial decisions and will penalised accordingly, however filing for bankruptcy is also the first step to financial freedom. Many folks struggle for years just to make ends meet, while their debts keep compounding, so in most cases, bankruptcy is a chance for a new beginning for people that are unable to repay their debts.

 

Even though I’ve never been bankrupt myself, I’ve witnessed the journey of lots of individuals who have and surprisingly, many people are better off and glad they underwent the process. If you’re enduring financial hardship and thinking about bankruptcy, this article will detail what life is like after you declare bankruptcy.

 

You Won’t Be Completely Debt Free By Filing For Bankruptcy

 

Bankruptcy is very complicated, and there is a frequent misconception that all debts are removed by filing for bankruptcy. This is certainly not the case. There are numerous debts that won’t be removed, for instance Centrelink debts, HECS debts, child support, court imposed fines (for instance speeding tickets), and money that is owed to an insurance provider arising from a car accident where you were uninsured and at fault. On the contrary, filing for bankruptcy will clear debts such as credit cards, GST and tax, and unsecured personal loans. The truth is, you will still have debts to pay after you file for bankruptcy, but the most notable debts in most cases, such as credit cards, will be eliminated.

 

Feelings Of Guilt And Shame Are Ordinary

 

Bankruptcy is a demanding process and lots of folks who file for bankruptcy have feelings of regret and humiliation; as if they’ve lost in life. This is natural, however it’s important to overcome these emotions because the truth is, humans make errors, and bankruptcy is a way that you can make a fresh start financially and get your life back on the right track. The sooner you recover from these feelings of shame, 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 report, 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 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 option to secure loans for secured assets like houses and cars, but your interest rates will be much higher because of your poor credit rating. Though it’s not always sensible 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 receive all types of loans again at competitive rates.

 

Life after filing for bankruptcy obviously isn’t easy, but the emotional relief that most individuals experience after starting the process definitely softens the blow. There are some considerable financial consequences 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 problems, 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 difficult, but it’s also not the end of the world. If you ‘d like to talk with someone about your financial circumstances, reach out to Bankruptcy Experts Australia on 1300 795 575 for a confidential discussion, or alternatively visit their website for additional information: www.bankruptcyexpertsaustralia.com.au

 

Sources:

 

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

 

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