August 2, 2017 0

What Is It Like To Go Bankrupt?

Posted by:Charles Bosse onAugust 2, 2017

There’s no doubt that bankruptcy isn’t the most desirable situation to be dealing with. There are some drastic 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 happen very quickly, and many individuals find themselves in this situation as a result of a number of factors. Not having the ability to work due to illness is one of the most frequent reasons individuals declare bankruptcy. It’s not like they had any control over the situation, but being unable to settle their debts because they have no income is the hard reality they will have to face. In fact, 7,900 individuals in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people may believe. In my opinion, bankruptcy is neither good nor bad. Without a doubt, those who declare bankruptcy have made some bad financial decisions and will penalised appropriately, nonetheless declaring bankruptcy is also the first step to financial freedom. Lots of folks struggle for years just to make ends meet, whilst their debts keep compounding, so often times, bankruptcy is a chance for a fresh start for people that are unable to repay their debts.

Whilst I’ve never been bankrupt myself, I’ve witnessed the journey of many people who have and surprisingly, many people are better off and glad they underwent the process. If you’re experiencing financial difficulties and considering bankruptcy, this post will summarise what life is like after you declare bankruptcy.

You Will Not Be Debt Free By Declaring Bankruptcy

Bankruptcy is very complicated, and there is a common misconception that all debts are eliminated by filing for bankruptcy. This is definitely not the case. There are a range of debts that won’t be eliminated, including Centrelink debts, HECS debts, child support, court imposed fines (for instance speeding tickets), and also money that is owed to an insurance company arising from a car accident where you were uninsured and in the wrong. Conversely, declaring bankruptcy will remove debts such as 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 critical debts in many cases, such as credit cards, will be cleared.

Feelings Of Guilt And Embarrassment Are Ordinary

Bankruptcy is a taxing process and lots of people who file for bankruptcy have feelings of remorse and humiliation; as if they’ve lost in life. This is regular, however it’s critical to overcome these emotions because the reality is, humans make mistakes, and bankruptcy is a way that you can go back to square one financially and get your life back on track. The sooner you recover from these feelings of self-loathing, 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 history. Bear in mind, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit rating, so it’s definitely 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 imperative that you start rebuilding your credit history by maintaining a regular 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 acquire loans for secured assets like houses and cars, but your interest rates will be much higher due to your poor credit report. Even though it’s not always sensible 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 chance to obtain all kinds of loans again at competitive rates.

Life after filing for bankruptcy certainly isn’t easy, but the emotional relief that most people experience after starting 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 hardship, 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 linked with bankruptcy. It’s difficult, but it’s also not the end of the world. If you ‘d like to talk with someone about your financial circumstances, contact Fresh Start Solutions Adelaide on 1300 818 575 for a confidential discussion, or alternatively visit their website for more information: https://freshstartsolutions.com.au/bankruptcy-adelaide

Sources:

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

 

Leave a Reply

Your email address will not be published. Required fields are marked *

Copyrights © Fresh Start Solution.