Bankruptcy is not a decision that should be taken lightly. There are some serious financial implications involved and your financial freedom will be restricted for several years to come. This doesn’t indicate that filing for bankruptcy is the end of the world though. It should actually be regarded 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 ability to buy homes, cars and acquire credit cards after they’re discharged. Along with this, understanding what life is like after you have filed for bankruptcy will evidently give you insight into making better financial decisions in the future.
Basically, once you have filed for bankruptcy, you forfeit control of your finances and assets to a Trustee in exchange for protection against legal proceeding that may 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 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 aspires 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 restrictions of declaring bankruptcy is that you cannot leave the country while you’re undischarged unless you seek permission from your Trustee. To do this, you’ll have 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 to another country 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 Instantly
One thing that surprises many discharged bankrupts is that they will immediately be offered credit by a variety of financial institutions. The reason behind this is that you won’t be able to declare bankruptcy again for an extended 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 improve your credit history, which will help you in the recovery process. But be wary, you don’t want to take every offer thrown in your direction as some lenders are very dubious and include hidden fees and charges that can put you in debt again immediately. The trick is to rebuild your credit score gradually.
Buying A Home Is Certainly Possible
There’s a popular misconception that once you declare bankruptcy, you will no longer have the ability to attain credit for a home loan. This is definitely not the case. Whilst bankruptcy will leave you with a bad credit rating, you can still buy a home if you have the ability to rebuild your credit within a few years, you pay all your bills on time, and you demonstrate a responsible use of credit. Naturally, you won’t be able to obtain a home loan straight after you’re discharged, so it’s paramount to build your credit score wisely before even contemplating securing a home loan.
Check Your Credit On A Regular Basis
Most financial specialists recommend that discharged bankrupts should examine their credit report at least twice a year. After initially filing for bankruptcy though, it’s critical that you examine your credit report every month for at least the first 6 months into your bankruptcy. Certain 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 prevent any further difficulties, it’s critical that you keep track of your credit report to make sure that it’s accurate and up to date.
Even though bankruptcy isn’t the ideal position to be in, it doesn’t mean that your financial future is permanently restricted. There are some severe financial restrictions imposed on individuals that declare bankruptcy, but after they become discharged and slowly rebuild their credit history, they’re perfectly capable of securing a bright financial future. Securing a mortgage and other credit lines will be possible a couple of years after discharge if the recovery process is well-planned and implemented. Hence, 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 should be taken into account to ensure a smooth recovery process. If you’re thinking of declaring bankruptcy, phone Bankruptcy Melbourne on 1300 879 867 or visit their website for additional information: www.bankruptcymelbourne.com