Bankruptcy is not a decision that should be taken lightly. There are some severe financial consequences involved and your financial freedom will be confined for several years to come. This doesn’t indicate that filing for bankruptcy is the end of the world though. It should really be considered as the first step in securing a bright financial future for you and your family. Millions of individuals file for bankruptcy each year and the majority of them are able to buy homes, cars and acquire credit cards after they’re discharged. In addition to this, understanding what life is like after you have declared bankruptcy will certainly give you insight into making better financial decisions in the future.
Essentially, once you have declared bankruptcy, you give up control of your finances and assets to a Trustee for protection against legal proceeding that could be taken by your creditors. Once the legal process has been finalised, you’ll be undischarged for a specific period of time (in most cases 3 years) after which time you’ll become discharged, which indicates that the financial limitations you suffered during bankruptcy are removed. 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 declare bankruptcy and what options you’ll have after you become discharged.
You Can’t Leave The Country Without Permission
One of the limitations of declaring bankruptcy is that you cannot exit the country while you’re undischarged unless you request permission from your Trustee. To do this, you’ll have to supply a lot of details regarding your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel abroad without prior permission from your bankruptcy Trustee, and in most cases will increase the duration of your undischarged bankruptcy to a minimum of five years as opposed to three.
You Will Be Offered Credit Immediately
One thing that surprises lots of discharged bankrupts is that they will immediately be offered credit by a wide range of loan providers. The main reason behind this is that you won’t have the capacity to file for bankruptcy again for an extensive period of time, so creditors understand that they have a good chance of getting their money back if you secure a loan. In some cases, securing a loan and making timely repayments will help strengthen your credit history, which will help you in the recovery process. But be cautious, you don’t want to take every offer thrown in your direction as some loan providers 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 Certainly Possible
There’s a popular misconception that once you file for bankruptcy, you will no longer have the chance to secure credit for a home loan. This is definitely not the case. Although bankruptcy will leave you with a bad credit record, you can still buy a home if you have the capacity to rebuild your credit within a few years, you pay all your bills in a timely manner, and you demonstrate a responsible use of credit. Obviously, you won’t be able to acquire a home loan straight after you’re discharged, so it’s crucial to build your credit record carefully before even envisioning securing a home loan.
Check Your Credit Regularly
Most financial experts recommend that discharged bankrupts should take a look at their credit report around twice a year. After initially declaring bankruptcy though, it’s paramount that you inspect your credit report every month for at least the first six months into your bankruptcy. Various creditors may still be requesting payments even though you are not required to make payments on any debts that were discharged in the bankruptcy process. So to stay clear of any further complications, it’s vital that you monitor your credit report to ensure it’s accurate and up to date.
Although bankruptcy isn’t the most ideal situation to be in, it doesn’t mean that your financial future is permanently restrained. There are some severe financial restraints imposed on people that declare bankruptcy, but after they become discharged and slowly rebuild their credit score, they’re perfectly capable of securing a bright financial future. Acquiring a mortgage and other lines of credit will be possible a couple of years after discharge if the recovery process is well-planned and implemented. For this reason, it’s important that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is very complicated and there are many factors to need to be taken into consideration to ensure a smooth recovery process. If you’re contemplating filing for bankruptcy, phone Bankruptcy Experts on 1300 795 575 or visit their website for more details: www.bankruptcyexperts.com.au