Bankruptcy is not a decision that should be taken lightly. There are some heavy financial repercussions involved and your financial freedom will be limited for many years to come. This doesn’t indicate that declaring bankruptcy is the end of the world though. It should actually be thought of as the first step in securing a bright financial future for you and your family. Millions of individuals file for bankruptcy each year and most 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 filed for bankruptcy will not surprisingly 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 for protection against legal proceeding 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 means that the financial limitations you suffered 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 restraints 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 supply 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 abroad without prior consent from your bankruptcy Trustee, and in many cases will increase the duration of your undischarged bankruptcy to a minimum of 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 large variety of creditors. The main reason behind this is that you won’t be able to file for 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 cases, obtaining a loan and making timely repayments will help strengthen your credit history, which will help you in the recovery process. But be mindful, you don’t want to accept 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 immediately. The key is to rebuild your credit record slowly.
Buying A Home Is Definitely Possible
There’s a frequent misconception that once you declare bankruptcy, you will no longer have the opportunity to acquire credit for a mortgage. This is definitely not the case. Although bankruptcy will leave you with a poor credit rating, you can still purchase a home if you have the capacity to rebuild your credit within a few years, you pay all your bills on time, and you display a responsible use of credit. Needless to say, you won’t have the capacity to acquire a home loan straight after you’re discharged, so it’s important to build your credit record intelligently before even contemplating securing a home loan.
Check Your Credit Frequently
Most financial experts recommend that discharged bankrupts should take a look at their credit report around twice a year. After initially filing for bankruptcy though, it’s crucial that you examine your credit report each month for at least the first 6 months into your bankruptcy. A few 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 steer clear of any further complications, it’s essential that you keep an eye on your credit report to ensure it’s accurate and up to date.
Even though bankruptcy isn’t the preferred situation to be in, it doesn’t mean that your financial future is permanently restrained. There are some severe financial restrictions imposed on people that declare bankruptcy, but after they become discharged and slowly rebuild their credit history, they’re perfectly capable of securing a bright financial future. Obtaining 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. Consequently, it’s paramount 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 need to be considered to ensure a smooth recovery process. If you’re thinking about declaring bankruptcy, talk with Bankruptcy Experts Darwin on 1300 795 575 or visit their website for more details: www.bankruptcyexpertsdarwin.com.au