Bankruptcy is not a decision that should be taken lightly. There are some serious financial consequences involved and your financial freedom will be restricted for many years to come. This doesn’t suggest 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 people declare bankruptcy each year and a lot of them have the capacity 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 clearly give you insight into making better financial decisions in the future.
In simple terms, once you have declared bankruptcy, you hand over 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 means that the financial constraints 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 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 drawbacks of declaring bankruptcy is that you can’t exit the country while you’re undischarged unless you request permission from your Trustee. To do this, you’ll need to provide a lot of details relating to 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 many cases will increase the length of your undischarged bankruptcy to a minimum of five years as opposed to three.
You Will Be Offered Credit Straight Away
One thing that surprises many discharged bankrupts is that they will immediately be offered credit by a large variety of financial institutions. The main reason behind this is that you won’t be able 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, obtaining a loan and making timely repayments will help strengthen your credit score, which will aid you in the recovery process. But be wary, you don’t want to accept every offer thrown in your direction as some financial institutions are very dubious and include hidden fees and charges that can put you in debt again instantly. The key is to rebuild your credit history slowly.
Buying A Home Is Certainly Possible
There’s a popular misconception that after you declare bankruptcy, you will no longer have the ability to secure credit for a mortgage. This is definitely not the case. Although bankruptcy will leave you with a poor credit record, you can still buy a home if you’re able 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 be able to acquire a mortgage straight after you’re discharged, so it’s imperative to build your credit record carefully before even thinking of securing a home loan.
Check Your Credit On A Regular Basis
Most financial experts advise that discharged bankrupts should check their credit report at the very least twice a year. After initially declaring bankruptcy though, it’s crucial that you take a look at your credit report each month for at least the first 6 months into your bankruptcy. Some creditors may still be demanding payments even though you are not required to make payments on any debts that were discharged in the bankruptcy process. So to steer clear of any further difficulties, it’s pressing that you keep track of your credit report to make sure it’s accurate and up to date.
Though bankruptcy isn’t the preferred position to be in, it doesn’t mean that your financial future is permanently restrained. There are some serious financial limitations 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 few years after discharge if the recovery process is well-planned and executed. Hence, it’s imperative 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 have to be taken into account to ensure a smooth recovery process. If you’re considering declaring bankruptcy, speak with Bankruptcy Experts Brisbane on 1300 795 575 or visit their website for more details: www.bankruptcyexpertsbrisbane.com.au