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 best scenario to be confronting. There are some serious financial penalties involved and it’s a very complex and stressful process that will affect you financially for a couple of years to come. Finding yourself in mountains of debt can materialise very quickly, and many people find themselves in this situation as a result of a wide variety of factors. Not having the capacity to work resulting from illness is one of the most common reasons people file for bankruptcy. It’s not as if they had any control over the situation, but being unable to settle their debts considering that they have no income is the hard reality they have to face. In truth, 7,900 people in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as uncommon as some people believe. If you ask me, I think that bankruptcy is neither good nor bad. Yes, those who file for bankruptcy have made some bad financial decisions and will reprimanded appropriately, nevertheless declaring bankruptcy is also the first step to financial freedom. Lots of people struggle for years just to make ends meet, whilst their debts keep multiplying, so in a lot of cases, bankruptcy is a chance for a clean slate 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 individuals who have and surprisingly, many people are better off and glad they went through the process. If you’re grappling with financial difficulties and contemplating bankruptcy, this article will detail what life is like after you declare bankruptcy.

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

Bankruptcy is rather complicated, and there is a general misconception that all debts are eliminated by filing for bankruptcy. This is certainly not the case. There are various sorts of debts that won’t be cleared, for instance 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. On the other hand, filing for bankruptcy will remove debts like credit cards, GST and tax, and unsecured personal loans. The truth 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 eliminated.

Feelings Of Regret And Embarrassment Are Ordinary

Bankruptcy is a taxing process and many people who file for bankruptcy have feelings of guilt and embarrassment; as if they’ve lost in life. This is quite standard, however it’s paramount 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 guilt, the sooner you’ll be able to start the recovery process and work out a plan of how you’re going to repay your remaining debts and rebuild your credit rating. Don’t forget, 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 filing for bankruptcy you won’t be able to borrow any money under any circumstances for three years. During this time, it’s necessary that you start rebuilding your credit rating by maintaining a steady 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 attain loans for secured assets like houses and cars, but your interest rates will be much higher as a result of your poor credit history. Whilst it’s not always advisable to acquire loans straight away, it is possible. After seven years from the time you became bankrupt, your credit history will be clean, and you will have the opportunity to obtain all kinds of loans again at competitive rates.

Life after filing for bankruptcy definitely isn’t easy, but the emotional relief that most individuals experience after beginning the process certainly softens the blow. There are some significant 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 confronting financial problems, 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 not easy, but it’s also not the end of the world. If you ‘d like to speak to someone about your financial predicament, get in touch with Bankruptcy Experts Alice Springs on 1300 795 575 for a confidential discussion, or alternatively visit their website for additional information: https://www.bankruptcyexpertsalicesprings.com.au

Sources:

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

 

By | 2017-11-17T05:04:20+00:00 August 8th, 2017|article, blog, brankrupt|0 Comments

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