What Happens After You Declare Bankruptcy
Bankruptcy is not a decision that should be taken lightly. There are some heavy financial implications involved and your financial freedom will be restricted for several years to come. This doesn’t suggest that declaring bankruptcy is the end of the world though. It should really 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 many of them have the capacity to buy homes, cars and attain credit cards after they’re discharged. Further to this, understanding what life is like after you have filed for bankruptcy will naturally 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 for protection against legal proceeding that may 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 three years) after which time you’ll become discharged, which means that the financial stipulations 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 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 drawbacks 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 supply a lot of details regarding 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 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 Straight Away
One thing that surprises plenty of discharged bankrupts is that they will immediately be offered credit by a wide range of creditors. The reason behind this is that you won’t have the capacity to declare bankruptcy again for an extensive period of time, so lenders understand that they have a good chance of getting their money back if you secure a loan. In certain situations, obtaining a loan and making timely repayments will help improve your credit history, which will aid you in the recovery process. But be warned, you don’t want to take 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 immediately. The key is to rebuild your credit rating slowly.
Buying A Home Is Definitely Possible
There’s a regular misconception that once you file for bankruptcy, you will no longer have the ability to attain credit for a home loan. This is certainly not the case. Whilst bankruptcy will leave you with a bad credit rating, you can still purchase 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 demonstrate a responsible use of credit. Obviously, you won’t have the ability to obtain a home loan straight after you’re discharged, so it’s paramount to build your credit history carefully before even contemplating securing a mortgage.
Check Your Credit Regularly
Most financial specialists advise that discharged bankrupts should check their credit report about twice a year. After initially declaring bankruptcy though, it’s necessary that you examine your credit report every month for at least the first 6 months into your bankruptcy. A couple 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 avoid any further difficulties, it’s critical that you monitor your credit report to make sure it’s correct and up to date.
While 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 restrictions 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. Acquiring 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. Hence, it’s crucial that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is considerably complicated and there are many factors to have to be considered to ensure a smooth recovery process. If you’re thinking about filing for bankruptcy, speak with Bankruptcy Experts Sydney on 1300 795 575 or visit their website for more information: www.bankruptcyexpertssydney.com.au