Bankruptcy is not a decision that should be taken lightly. There are some harsh financial implications involved and your financial freedom will be restricted for several years to come. This doesn’t indicate that declaring 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 many of them are able to buy homes, cars and obtain credit cards after they’re discharged. Further to this, understanding what life is like after you have declared bankruptcy will definitely give you insight into making better financial decisions in the future.
In a nutshell, once you have declared bankruptcy, you surrender control of your finances and assets to a Trustee in exchange for protection against litigation that could 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 3 years) after which time you’ll become discharged, which indicates that the financial limitations you sustained during bankruptcy are removed. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article strives 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 restraints of declaring bankruptcy is that you cannot leave the country while you’re undischarged unless you request permission from your Trustee. To do this, you’ll have to supply a lot of information regarding 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 most cases will increase the length of your undischarged bankruptcy to a minimum of five years as opposed to three.
You Will Be Offered Credit Instantly
One thing that surprises a lot of discharged bankrupts is that they will immediately be offered credit by a wide variety of lending institutions. The reason behind this is that you won’t have the ability to declare bankruptcy again for a lengthy period of time, so lenders understand that they have a good chance of getting their money back if you secure a loan. In some situations, acquiring a loan and making timely repayments will help strengthen your credit rating, which will aid you in the recovery process. But be cautious, you don’t want to take every offer thrown in your direction as some creditors are very dubious and include hidden fees and charges that can put you in debt again straight away. The key is to rebuild your credit rating slowly.
Buying A Home Is Certainly Possible
There’s a standard misconception that whenever you declare bankruptcy, you will no longer have the chance to secure credit for a mortgage. This is definitely not the case. Although bankruptcy will leave you with a bad credit score, 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 exhibit a responsible use of credit. Naturally, you won’t have the capacity to get a home loan straight after you’re discharged, so it’s very important to build your credit history wisely before even thinking of securing a home loan.
Check Your Credit Regularly
Most financial experts recommend that discharged bankrupts should inspect their credit report at least twice a year. After initially filing for bankruptcy though, it’s crucial that you take a look at your credit report monthly for at least the first 6 months into your bankruptcy. A number of creditors may still be demanding payments despite the fact that you are not required to make payments on any debts that were discharged in the bankruptcy process. So to stay clear of any further difficulties, it’s necessary that you keep an eye on your credit report to make sure that it’s correct and up to date.
Even though bankruptcy isn’t the preferred position to be in, it doesn’t mean that your financial future is permanently restricted. There are some severe financial restraints imposed on individuals that file for bankruptcy, but after they become discharged and slowly rebuild their credit history, they’re completely capable of securing a bright financial future. Obtaining home loans and other lines of credit will be possible a couple of years after discharge if the recovery process is well-planned and implemented. Thus, it’s vital that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is rather complicated and there are many factors to have to be considered to ensure a smooth recovery process. If you’re thinking about declaring bankruptcy, speak with Bankruptcy Experts Port Stephens on 1300 795 575 or visit their website for more details: www.bankruptcyexpertsportstephens.com.au