Bankruptcy is not a decision that should be taken lightly. There are some taxing financial implications involved and your financial freedom will be restrained for many years to come. This doesn’t suggest that filing for bankruptcy is the end of the world though. It should actually be regarded as the first step in securing a bright financial future for you and your family. Millions of individuals file for bankruptcy every year and many of them are able to buy homes, cars and acquire credit cards after they’re discharged. In addition to this, understanding what life is like after you have declared bankruptcy will naturally give you insight into making better financial decisions in the future.
Generally speaking, once you have filed for bankruptcy, you give up control of your finances and assets to a Trustee in exchange for protection against legal action that might be taken by your creditors. Once the legal process has been finalised, you’ll be undischarged for a certain period of time (in most cases 3 years) after which time you’ll become discharged, which signifies that the financial stipulations you sustained during bankruptcy are lifted. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article tries 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 exit the country while you’re undischarged only if you request permission from your Trustee. To do this, you’ll need to supply 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 permission from your bankruptcy Trustee, and in most cases will increase the length of your undischarged bankruptcy to a minimum of five years as opposed to three.
You Will Be Offered Credit Straight Away
One thing that surprises many discharged bankrupts is that they will immediately be offered credit by a variety of lenders. The reason behind this is that you won’t have the capacity to file for bankruptcy again for a lengthy period of time, so lenders understand that they have a good chance of getting their money back if you secure a loan. Occasionally, acquiring a loan and making timely repayments will help strengthen your credit history, which will assist you in the recovery process. But be mindful, you don’t want to accept every offer thrown in your direction as some loan providers are very dubious and include hidden fees and charges that can put you in debt again instantly. The trick is to rebuild your credit score steadily.
Buying A Home Is Certainly Possible
There’s a common misconception that after you declare bankruptcy, you will no longer have the opportunity to acquire credit for a mortgage. This is definitely not the case. While bankruptcy will leave you with a poor credit history, you can still purchase a home if you have the capacity to rebuild your credit within a few years, you pay all your bills on time, and you demonstrate a responsible use of credit. Obviously, you won’t be able to acquire a mortgage straight after you’re discharged, so it’s important to build your credit score sensibly before even considering securing a home loan.
Check Your Credit On A Regular Basis
Most financial specialists recommend that discharged bankrupts should take a look at their credit report at least twice a year. After initially filing for bankruptcy though, it’s critical that you check your credit report monthly for at least the first six months into your bankruptcy. Various creditors may still be requesting payments despite the fact that you are not required to make payments on any debts that were discharged in the bankruptcy process. So to minimise any further difficulties, it’s imperative that you keep an eye on your credit report to make sure that it’s accurate and up to date.
Even though bankruptcy isn’t the most ideal position to be in, it doesn’t mean that your financial future is permanently constrained. There are some serious financial limitations imposed on people that file for bankruptcy, but after they become discharged and slowly rebuild their credit history, they’re perfectly capable of securing a bright financial future. Obtaining a mortgage and other lines of credit will be possible a few years after discharge if the recovery process is well-planned and implemented. Hence, it’s paramount 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 have to be taken into account to ensure a smooth recovery process. If you’re contemplating filing for bankruptcy, speak with Bankruptcy Experts Australia on 1300 795 575 or visit their website for additional information: www.bankruptcyexpertsaustralia.com.au