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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 ideal situation to be grappling with. There are some severe financial consequences involved and it’s a very complicated and stressful process that will affect you financially for a couple of years to come. Finding yourself in mountains of debt can happen very rapidly, and many individuals end up in this situation due to a wide range of factors. Not having the capacity to work due to illness is one of the most common reasons why individuals file for bankruptcy. It’s not as if they had any control over the situation, but being unable to settle their debts given that they have no income is the hard reality they must face. Actually, 7,900 people in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as unusual as some people believe. If you ask me, I think that bankruptcy is neither good nor bad. Indeed, those who file for bankruptcy have made some poor financial decisions and will reprimanded accordingly, nonetheless declaring bankruptcy is also the first step to financial freedom. Some folks struggle for years just to make ends meet, whilst their debts keep multiplying, so in a lot of cases, bankruptcy is an opportunity for a fresh start for 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, most people are better off and glad they went through the process. If you’re experiencing financial difficulties and contemplating bankruptcy, this article will explain what life is like after you file for bankruptcy.

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

Bankruptcy is pretty complicated, and there is a general misconception that all debts are cleared by declaring bankruptcy. This is certainly not the case. There are a range of debts that won’t be cleared, for instance Centrelink debts, HECS debts, child support, court imposed fines (such as speeding tickets), as well as money that is owed to an insurance provider arising from a car accident where you were uninsured and at fault. Conversely, declaring bankruptcy will eliminate debts such as 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 substantial debts in many cases, such as credit cards, will be eliminated.

Feelings Of Remorse And Humiliation Are Standard

Bankruptcy is a stressful process and most people who declare bankruptcy have feelings of guilt and embarrassment; as if they’ve lost in life. This is quite common, however it’s critical 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 the right track. The sooner you recover from these feelings of humiliation, 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 report, 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 stable 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 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. Whilst it’s not always a good idea to attain 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 acquire all forms of loans again at competitive rates.

Life after declaring bankruptcy definitely isn’t easy, but the emotional relief that most people experience after starting 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 battling financially for years because you’re afraid of the stigma related to bankruptcy. It’s challenging, but it’s also not the end of the world. If you ‘d like to speak to someone about your financial situation, get in touch with Bankruptcy Experts Gosford on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: http://www.bankruptcyexpertsgosford.com.au

Sources:

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

 

By | 2017-11-16T01:38:54+00:00 August 8th, 2017|Article, Bankruptcy, Blog|0 Comments

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