Bankruptcy is not a decision that should be taken lightly. There are some harsh financial consequences involved and your financial freedom will be restricted for years to come. This doesn’t imply that declaring bankruptcy is the end of the world though. It should really be thought of as the first step in securing a bright financial future for you and your family. Millions of people declare bankruptcy each year and most of them have the capacity 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 surely give you insight into making better financial decisions in the future.
Basically, once you have filed for bankruptcy, you surrender control of your finances and assets to a Trustee in exchange for protection against potential lawsuits that might be taken by your creditors. Once the legal process has been completed, 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 restraints you sustained during bankruptcy are lifted. 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 limitations of declaring bankruptcy is that you cannot exit the country while you’re undischarged unless you seek permission from your Trustee. To do this, you’ll need to provide a lot of information relating to your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel abroad without prior approval from your bankruptcy Trustee, and in many cases will increase the duration of your undischarged bankruptcy to at least five years instead of three.
You Will Be Offered Credit Instantly
One thing that surprises plenty of discharged bankrupts is that they will immediately be offered credit by a wide range of lending institutions. The explanation behind this is that you won’t be able to file for bankruptcy again for a long 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, obtaining a loan and making timely repayments will help improve your credit score, which will aid you in the recovery process. But be mindful, you don’t want to accept every offer thrown in your direction as some lending institutions 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 record steadily.
Buying A Home Is Certainly Possible
There’s a common misconception that after you declare bankruptcy, you will no longer have the ability to secure credit for a mortgage. This is certainly not the case. Though bankruptcy will leave you with a poor credit score, you can still buy a home if you’re able to rebuild your credit within a couple of years, you pay all your bills in a timely manner, and you display a responsible use of credit. Of course, you won’t have the ability to get a home loan straight after you’re discharged, so it’s imperative to build your credit score sensibly before even contemplating securing a home loan.
Check Your Credit On A Regular Basis
Most financial experts advise that discharged bankrupts should review their credit report around twice a year. After initially declaring bankruptcy though, it’s imperative that you review your credit report each month for at least the first six months into your bankruptcy. A few 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 prevent any further complications, it’s essential that you keep an eye on your credit report to make sure it’s accurate and up to date.
Whilst bankruptcy isn’t the ideal situation to be in, it doesn’t mean that your financial future is permanently constrained. There are some serious financial limitations imposed on people 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. Acquiring a mortgage and other lines of credit will be possible a few years after discharge if the recovery process is well-planned and executed. Consequently, it’s vital that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is quite complicated and there are many factors to should be taken into consideration to ensure a smooth recovery process. If you’re thinking about filing for bankruptcy, speak to Bankruptcy Australia on 1300 795 575 or visit their website for more details: www.bankruptcy-australia.net.au