What Is It Like To Go Bankrupt?

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What Is It Like To Go Bankrupt?

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There’s no doubt that bankruptcy isn’t the most desirable scenario to be facing. There are some unpleasant financial implications involved and it’s a very elaborate and stressful process that will affect you financially for a couple of years to come. Ending up in mountains of debt can come about very quickly, and many individuals find themselves in this situation because of a wide range of factors. Not being able to work due to illness is one of the most frequent reasons individuals declare bankruptcy. It’s not as if 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 must face. In truth, 7,900 people in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people may believe. If you ask me, I think that bankruptcy is neither good nor bad. Certainly, those who declare bankruptcy have made some poor financial decisions and will reprimanded accordingly, nevertheless declaring bankruptcy is also the first step to financial freedom. A great deal of folks struggle for years just to make ends meet, whilst their debts keep worsening, so often times, bankruptcy is an opportunity for a new beginning for those people that are unable to repay their debts.

Even though 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 facing financial problems and contemplating bankruptcy, this blog will explain what life is like after you file for bankruptcy.

You Won’t Be Completely Debt Free By Filing For Bankruptcy

Bankruptcy is very 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 example Centrelink debts, HECS debts, child support, court imposed fines (for example speeding tickets), and also money that is owed to an insurance provider resulting from a car accident where you were uninsured and at fault. On the other hand, declaring bankruptcy will remove 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 serious debts in many cases, such as credit cards, will be cleared.

Feelings Of Remorse And Humiliation Are Normal

Bankruptcy is a taxing process and many people who file for bankruptcy have feelings of regret and embarrassment; as if they’ve lost in life. This is quite natural, however it’s essential to overcome these emotions because the truth is, humans make errors, and bankruptcy is a way that you can make a fresh start financially and get your life back on the right track. The sooner you recover from these feelings of remorse, 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 report. Just remember, 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 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 rating by maintaining a stable 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 chance to obtain loans for secured assets like houses and cars, but your interest rates will be much higher as a result of your poor credit report. Though it’s not always appropriate to obtain 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 chance to receive all kinds of loans again at competitive rates.

Life after declaring bankruptcy definitely isn’t easy, but the emotional relief that most individuals experience after starting the process definitely softens the blow. There are some significant 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 facing 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’re afraid of the stigma linked with 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 position, get in contact with Bankruptcy Experts Shepparton on 1300 795 575 for a confidential discussion, or alternatively visit their website for additional information: http://www.bankruptcyexpertsshepparton.com.au

 

Sources:

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

By | 2017-10-10T06:34:51+00:00 August 17th, 2017|Bankrupt, Liquidation|0 Comments

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