What Is It Like To Go Bankrupt?

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What Is It Like To Go Bankrupt?

Bankruptcy Wangaratta

There’s no doubt that bankruptcy isn’t the best scenario to be dealing with. There are some serious financial repercussions involved and it’s a very exhausting and stressful process that will affect you financially for several years to come. Finding yourself in mountains of debt can materialise in a heartbeat, and many people end up in this situation due to a multitude of factors. Not being able to work resulting from illness is one of the most frequent reasons why people declare bankruptcy. It’s not as if they had any control over the situation, but being unable to settle their debts due to the fact that they have no income is the hard reality they must face. In fact, 7,900 people in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people believe. In my opinion, bankruptcy is neither good nor bad. Certainly, those who declare bankruptcy have made some poor financial decisions and will penalised appropriately, nonetheless filing for bankruptcy is also the first step to financial freedom. Lots of individuals struggle for years just to make ends meet, whilst their debts keep multiplying, so in most cases, bankruptcy is a chance for a new beginning for those individuals that are unable to repay their debts.

Even though 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 enduring financial distress and thinking about bankruptcy, this article will outline what life is like after you declare bankruptcy.

You Will Not Be Debt Free By Filing For Bankruptcy

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

Feelings Of Guilt And Humiliation Are Regular

Bankruptcy is a taxing process and many individuals who declare bankruptcy have feelings of remorse and embarrassment; as if they’ve lost in life. This is common, however it’s important to overcome these emotions because the fact is, humans make mistakes, 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 guilt, the sooner you’ll be able to begin the recovery process and work out a plan of how you’re going to repay your outstanding debts and rebuild your credit history. Remember, 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 filing for bankruptcy you won’t be able to borrow any money under any circumstances for three years. During this time, it’s paramount that you start rebuilding your credit history by maintaining a consistent income and paying your bills and remaining debts on time. It’s simple but effective. After this three-year process, you become a discharged bankrupt and will have the option to attain loans for secured assets like houses and cars, but your interest rates will be much higher as a result of your poor credit rating. Although it’s not always suggested to obtain 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 chance to receive all sorts of loans again at competitive rates.

Life after declaring bankruptcy obviously isn’t easy, but the emotional relief that many individuals experience after starting the process definitely softens the blow. There are some significant financial repercussions 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 coping with 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 not easy, but it’s also not the end of the world. If you ‘d like to talk with someone about your financial predicament, contact Bankruptcy Experts Wangaratta on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: http://www.bankruptcyexpertswangaratta.com.au

Sources:

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

By | 2018-07-26T02:40:10+00:00 August 7th, 2017|Bankruptcy, Blog|0 Comments

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