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 question that bankruptcy isn’t the most desirable situation to be confronting. There are some unpleasant financial repercussions involved and it’s a very tough and stressful process that will affect you financially for years to come. Ending up in mountains of debt can transpire faster than you think, and many people end up in this situation due to a multitude of factors. Not having the capacity to work resulting from illness is one of the most frequent reasons why individuals declare bankruptcy. It’s not like they had any control over the circumstances, but being unable to pay off their debts since they have no income is the hard reality they need to face. In truth, 7,900 people in Australia filed for bankruptcy in the March 2017 quarter1, so it’s not as rare as some people believe. In my opinion, bankruptcy is neither good nor bad. Indeed, those who file for bankruptcy have made some bad financial decisions and will punished accordingly, but declaring bankruptcy is also the first step to financial freedom. A great deal of people struggle for years just to make ends meet, whilst their debts keep multiplying, so in many cases, bankruptcy is a chance for a fresh start for those individuals that are unable to repay their debts.

Even though I’ve never been bankrupt myself, I’ve witnessed the journey of many people who have and surprisingly, many people are better off and glad they went through the process. If you’re grappling with financial distress and considering bankruptcy, this post will detail what life is like after you declare bankruptcy.

You Will Not Be Debt Free By Declaring Bankruptcy

Bankruptcy is relatively complicated, and there is a frequent misconception that all debts are removed by filing for bankruptcy. This is definitely not the case. There are various debts that won’t be cleared, for instance Centrelink debts, HECS debts, child support, court imposed fines (such as speeding tickets), and also money that is owed to an insurance company resulting from a car accident where you were uninsured and at fault. On the contrary, declaring bankruptcy will remove debts such as credit cards, GST and tax, and unsecured personal loans. The truth 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 Guilt And Shame Are Normal

Bankruptcy is a taxing process and lots of folks who declare bankruptcy have feelings of remorse and embarrassment; as if they’ve lost in life. This is quite standard, however it’s necessary to overcome these emotions because the truth is, humans make mistakes, 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 history. Don’t forget, 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 paramount that you start rebuilding your credit rating by maintaining a steady 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 opportunity to receive loans for secured assets like houses and cars, but your interest rates will be much higher because of your poor credit report. Although it’s not always appropriate to secure loans straight away, it is possible. After seven years from the time you became bankrupt, your credit rating will be clean, and you will have the option to acquire all forms of loans again at competitive rates.

Life after declaring bankruptcy certainly isn’t easy, but the emotional relief that many individuals experience after beginning the process definitely softens the blow. There are some heavy 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 experiencing financial difficulties, it’s always best to seek professional advice sooner rather than later. Whatever you do, don’t keep struggling financially for years because you’re afraid of the stigma related to bankruptcy. It’s difficult, but it’s also not the end of the world. If you ‘d like to speak with someone about your financial circumstances, get in contact with Bankruptcy Experts Sunshine Coast on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: www.bankruptcyexpertssunshinecoast.com.au

 

Sources:

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

 

By | 2017-10-11T06:15:16+00:00 August 4th, 2017|Bankruptcy, Liquidation|0 Comments

About the Author:

Director of Fresh Start Solutions and specialises in helping people free themselves from overwhelming debt. Whether it's Bankruptcy, Liquidation, Insolvency Advice or simply General Debt Advice.