What Is It Like To Go Bankrupt?

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What Is It Like To Go Bankrupt?

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There’s no question that bankruptcy isn’t the best situation to be grappling with. There are some harsh 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 develop in the blink of an eye, and many people find themselves in this situation because of a multitude of factors. Not having the opportunity to work due to 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 pay their debts due to the fact that they have no income is the hard reality they will have to face. In reality, 7,900 individuals in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as uncommon as some people may believe. If you ask me, I think that bankruptcy is neither good nor bad. Indeed, those who file for bankruptcy have made some poor financial decisions and will penalised as necessary, however declaring bankruptcy is also the first step to financial freedom. Many individuals struggle for years just to make ends meet, even though their debts keep worsening, so in many cases, bankruptcy is a chance for a new beginning for those people that are unable to repay their debts.

While I’ve never been bankrupt myself, I’ve witnessed the journey of lots of individuals who have and surprisingly, most people are better off and glad they underwent the process. If you’re enduring financial problems and contemplating bankruptcy, this blog will describe what life is like after you file for bankruptcy.

You Will Not Be Debt Free By Filing For Bankruptcy

Bankruptcy is quite complicated, and there is a typical misconception that all debts are eliminated by filing for bankruptcy. This is certainly not the case. There are numerous debts that won’t be cleared, including Centrelink debts, HECS debts, child support, court imposed fines (for example speeding tickets), as well as money that is owed to an insurance provider resulting from a car accident where you were uninsured and in the wrong. On the contrary, declaring bankruptcy will eliminate debts like 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 substantial debts in most cases, such as credit cards, will be cleared.

Feelings Of Guilt And Embarrassment Are Regular

Bankruptcy is an arduous process and lots of folks who declare bankruptcy have feelings of remorse and embarrassment; as if they’ve lost in life. This is normal, however it’s important to overcome these emotions because the reality is, humans make errors, and bankruptcy is a way that you can make a fresh start financially and get your life back on track. The sooner you recover from these feelings of humiliation, the sooner you’ll be able to start the recovery process and work out a plan of how you’re going to repay your outstanding debts and rebuild your credit history. Don’t forget, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit history, 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 critical that you start rebuilding your credit rating 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 chance to acquire loans for secured assets like houses and cars, but your interest rates will be much higher as a result of your bad credit report. While it’s not always a good idea to secure 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 chance to obtain all forms of loans again at competitive rates.

Life after filing for bankruptcy surely isn’t easy, but the emotional relief that most individuals experience after beginning the process certainly softens the blow. There are some major 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 difficulties, it’s always best to seek professional advice sooner rather than later. Whatever you do, don’t keep struggling financially for years because you’re afraid of 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 state of affairs, contact Bankruptcy Experts Geraldton on 1300 795 575 for a confidential discussion, or alternatively visit their website for more details: www.bankruptcyexpertsgeraldton.com.au

 

Sources:

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

By | 2017-10-12T02:55:37+00:00 August 4th, 2017|Bankruptcy, Liquidation|0 Comments

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