Bankruptcy is not a decision that should be taken lightly. There are some taxing financial implications involved and your financial freedom will be restrained for many years to come. This doesn’t mean that declaring bankruptcy is the end of the world though. It should really be thought of as the first step in securing a bright financial future for you and your family. Millions of individuals file for bankruptcy each year and a lot of them are able to buy homes, cars and obtain credit cards after they’re discharged. Along with this, understanding what life is like after you have filed for bankruptcy will naturally give you insight into making better financial decisions in the future.
Basically, once you have declared bankruptcy, you relinquish control of your finances and assets to a Trustee for protection against potential lawsuits that might be taken by your creditors. Once the legal process has been finalised, you’ll be undischarged for a certain period of time (in most cases three years) after which time you’ll become discharged, which signifies that the financial limitations you incurred during bankruptcy are lifted. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article tries to achieve is to give you an understanding of what happens after you file for bankruptcy and what options you’ll have after you become discharged.
You Can’t Leave The Country Without Permission
One of the restraints of declaring bankruptcy is that you can’t leave the country while you’re undischarged unless you seek permission from your Trustee. To do this, you’ll have to supply a lot of details relating to your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel overseas without prior approval from your bankruptcy Trustee, and in many cases will increase the duration of your undischarged bankruptcy to a minimum of five years rather than three.
You Will Be Offered Credit Instantly
One thing that surprises lots of discharged bankrupts is that they will immediately be offered credit by a large variety of lenders. The main reason behind this is that you won’t have the capacity to file for bankruptcy again for a long period of time, so creditors understand that they have a good chance of getting their money back if you secure a loan. In some situations, obtaining a loan and making timely repayments will help improve your credit history, which will aid you in the recovery process. But be careful, you don’t want to accept every offer thrown in your direction as some lending institutions are very dubious and include hidden fees and charges that can put you in debt again instantly. The key is to rebuild your credit record slowly.
Buying A Home Is Definitely Possible
There’s a typical misconception that when you file for bankruptcy, you will no longer have the capacity to acquire credit for a home loan. This is definitely not the case. Though bankruptcy will leave you with a bad credit rating, you can still purchase a home if you have the capacity to rebuild your credit within a couple of years, you pay all your bills on time, and you exhibit a responsible use of credit. Naturally, you won’t be able to acquire a home loan straight after you’re discharged, so it’s very important to build your credit rating carefully before even thinking of securing a home loan.
Check Your Credit Regularly
Most financial specialists advise that discharged bankrupts should examine their credit report about twice a year. After initially declaring bankruptcy though, it’s vital that you take a look at your credit report each month for at least the first 6 months into your bankruptcy. A few creditors may still be demanding payments even though you are not required to make payments on any debts that were discharged in the bankruptcy process. So to prevent any further complications, it’s vital that you keep track of your credit report to make sure that it’s accurate and up to date.
Whilst bankruptcy isn’t the ideal position to be in, it doesn’t mean that your financial future is permanently limited. There are some severe financial limitations imposed on people that file for bankruptcy, but after they become discharged and slowly rebuild their credit score, they’re completely capable of securing a bright financial future. Acquiring a mortgage and other credit lines will be possible a couple of years after discharge if the recovery process is well-planned and implemented. Hence, it’s paramount that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is quite complicated and there are many factors to need to be taken into account to ensure a smooth recovery process. If you’re contemplating declaring bankruptcy, get in touch with Bankruptcy Experts Gosford on 1300 795 575 or visit their website for more information: www.bankruptcyexpertsgosford.com.au