August 2, 20170

What Is It Like To Go Bankrupt?

Posted by:Charles Bosse onAugust 2, 2017

Declaring Bankruptcy, Bankruptcy, Bankrupt

There’s no doubt that bankruptcy isn’t a desirable scenario to be confronting. There are some unpleasant financial implications involved and it’s a very demanding and stressful process that will affect you financially for several years to come. Ending up in mountains of debt can develop in a heartbeat, and lots of individuals find themselves in this situation because of a wide variety of factors. Not being able to work due to illness is one of the most frequent reasons why people declare bankruptcy. It’s not as if they had any control over the circumstances, but being unable to repay their debts because they have no income is the hard reality they must face. In reality, 7,900 individuals in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people may think. If you ask me, I think that bankruptcy is neither good nor bad. Indeed, those who declare bankruptcy have made some bad financial decisions and will penalised accordingly, however declaring bankruptcy is also the first step to financial freedom. Lots of folks struggle for years just to make ends meet, even though their debts keep worsening, so in most cases, bankruptcy is an opportunity for a fresh start for people that are unable to repay their debts.

Although I’ve never been bankrupt personally, I’ve witnessed the journey of many individuals who have and surprisingly, most individuals are better off and glad they went through the process. If you’re enduring financial difficulties and considering bankruptcy, this article will illustrate what life is like after you declare bankruptcy.

You Won’t Be Debt Free By Declaring Bankruptcy

Bankruptcy is very complicated, and there is a typical misconception that all debts are eliminated by filing for 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), and money that is owed to an insurance company arising from a car accident where you were uninsured and at fault. On the contrary, filing for bankruptcy will eliminate debts like credit cards, GST and tax, and unsecured personal loans. The reality is, you will still have debts to pay after you file for bankruptcy, but the most notable debts in many cases, such as credit cards, will be removed.

Feelings Of Guilt And Shame Are Standard

Bankruptcy is a demanding process and lots of folks who declare bankruptcy have feelings of guilt and embarrassment; as if they’ve lost in life. This is quite regular, however it’s essential to overcome these emotions because the truth is, humans make mistakes, and bankruptcy is a way that you can go back to square one financially and get your life back on the right track. The sooner you recover from these feelings of regret, 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 rating. Remember, 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 vital that you start rebuilding your credit report 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 opportunity to acquire loans for secured assets like houses and cars, but your interest rates will be much higher due to your poor credit rating. Though it’s not always sensible to acquire loans straight away, it is possible. After seven years from the time you became bankrupt, your credit report will be clean, and you will have the option to secure all forms of loans again at competitive rates.

Life after declaring bankruptcy surely isn’t easy, but the emotional relief that many individuals experience after starting the process certainly softens the blow. There are some severe financial implications involved, but declaring bankruptcy is the first step towards financial freedom and securing a bright future for you and your family. If you’re confronting financial distress, 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 difficult, but it’s also not the end of the world. If you ‘d like to talk to someone about your financial situation, contact Fresh Start Solutions on 1300 818 575 for a confidential discussion, or alternatively visit their website for more information: https://freshstartsolutions.com.au

Sources:

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

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