August 2, 2017 0

What Is It Like To Go Bankrupt?

Posted by:Charles Bosse onAugust 2, 2017

Declaring Bankruptcy,Bankruptcy Gold Coast,Bankruptcy Advice

There’s no doubt that bankruptcy isn’t the best situation to be confronting. There are some severe financial penalties involved and it’s a very problematic and stressful process that will affect you financially for several years to come. Ending up in mountains of debt can happen faster than you think, and many individuals find themselves in this situation as a result of a variety of factors. Not being able to work due to illness is one of the most frequent reasons why individuals declare bankruptcy. It’s not like they had any control over the circumstances, but being unable to pay their debts considering that they have no income is the hard reality they must 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 believe. If you ask me, I think that bankruptcy is neither good nor bad. Indeed, those who declare bankruptcy have made some poor financial decisions and will reprimanded as necessary, 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 compounding, so in many cases, bankruptcy is a chance for a fresh start for people that are unable to repay their debts.

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 underwent the process. If you’re experiencing financial hardship and contemplating bankruptcy, this article will outline what life is like after you file for bankruptcy.

You Won’t Be Completely 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 definitely not the case. There are a range of debts that won’t be removed, including 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. Conversely, filing for bankruptcy will clear debts like 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 removed.

Feelings Of Guilt And Embarrassment Are Ordinary

Bankruptcy is a demanding process and lots of people who declare bankruptcy have feelings of guilt and shame; as if they’ve lost in life. This is quite normal, however it’s essential to overcome these emotions because the fact is, humans make errors, 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 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 history. Keep in mind, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit report, 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 paramount that you start rebuilding your credit rating by maintaining a steady 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 as a result of your poor credit history. Although it’s not always sensible to secure 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 acquire 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 beginning the process certainly softens the blow. There are some substantial 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 encountering 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 related to 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 circumstances, get in touch with Fresh Start Solutions Gold Coast on 1300 818 575 for a confidential discussion, or alternatively visit their website for more details: http://freshstartsolutions.com.au/bankruptcy-goldcoast

 

Sources:

 

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

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