August 2, 2017 0

What Is It Like To Go Bankrupt?

Posted by:Charles Bosse onAugust 2, 2017

Declaring Bankruptcy,Bankruptcy Sydney, Bankruptcy Advice

There’s no doubt that bankruptcy isn’t the best situation to be dealing with. There are some serious financial consequences involved and it’s a very challenging and stressful process that will affect you financially for a couple of years to come. Finding yourself in mountains of debt can come about in the blink of an eye, and many people end up in this situation because of a wide variety of factors. Not being able to work resulting from illness is one of the most frequent reasons why people file for bankruptcy. It’s not like they had any control over the circumstances, but being unable to pay their debts due to the fact that they have no income is the hard reality they need to face. In reality, 7,900 individuals in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as rare as some people may believe. If you ask me, I think that bankruptcy is neither good nor bad. Yes, those who declare bankruptcy have made some bad financial decisions and will punished accordingly, nevertheless declaring bankruptcy is also the first step to financial freedom. Many folks struggle for years just to make ends meet, while their debts keep worsening, so in many cases, bankruptcy is a chance for a fresh start for individuals that are unable to repay their debts.

While I’ve never been bankrupt personally, I’ve witnessed the journey of lots of people who have and surprisingly, many people are better off and glad they underwent the process. If you’re enduring financial problems and contemplating bankruptcy, this article will explain what life is like after you declare bankruptcy.

You Won’t Be Debt Free By Declaring Bankruptcy

Bankruptcy is rather complicated, and there is a typical misconception that all debts are removed by declaring bankruptcy. This is definitely not the case. There are various debts that won’t be eliminated, for instance Centrelink debts, HECS debts, child support, court imposed fines (for instance speeding tickets), and also money that is owed to an insurance provider resulting from a car accident where you were uninsured and liable. On the contrary, declaring bankruptcy will clear debts like credit cards, GST and tax, and unsecured personal loans. The reality is, you will still have debts to pay after you declare bankruptcy, but the most serious debts in most cases, such as credit cards, will be eliminated.

Feelings Of Remorse And Humiliation Are Standard

Bankruptcy is an arduous process and most people who file for bankruptcy have feelings of regret and shame; as if they’ve lost in life. This is common, however it’s crucial to overcome these emotions because the fact is, humans make mistakes, 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 begin the recovery process and create a plan of how you’re going to repay your outstanding debts and rebuild your credit rating. Always remember, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit history, so it’s certainly not the end of the world.

You Can’t Borrow Any Money For Three Years

Unfortunately, by declaring bankruptcy you won’t be able to borrow any money under any circumstances for three years. During this time, it’s essential that you start rebuilding your credit report 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 option to acquire loans for secured assets like houses and cars, but your interest rates will be much higher as a result of your poor credit report. Whilst it’s not always recommended to attain 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 option to receive all kinds of loans again at competitive rates.

Life after declaring bankruptcy definitely isn’t easy, but the emotional relief that many people experience after beginning the process definitely softens the blow. There are some major financial consequences 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 struggling financially for years because you fear 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 predicament, get in contact with Fresh Start Solutions Sydney on 1300 818 575 for a confidential discussion, or alternatively visit their website for more details: http://freshstartsolutions.com.au/bankruptcy-sydney

Sources:

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

 

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