Having taken the difficult decision to declare bankruptcy, and having learnt all about what they are in for, people’s your questions will tend to turn to what life will be like afterwards. In this article, we explore the answer to this important question.
There is life after bankruptcy. In fact, there is life during the term of bankruptcy (usually three years in Australia). In fact, during the period of bankruptcy, there is a minimum amount of any income that you can earn are entitled to keep and which cannot be touched by creditors.
This is called the “Threshold Amount” and is adjusted twice a year. If you earn more than the threshold amount, then you are only required to pay a proportion of that excess towards your debts. So there is life during the bankruptcy process too!
After bankruptcy you will be discharged from all debts which you claim as part of the bankruptcy process. In essence, you will have a clean slate from which you have the opportunity to make a fresh start.
Additionally, you will be able to re-establish credit rating. Ironically, once you have fulfilled all your commitments, you will most likely begin receiving pre-approval marketing messages from lenders offering finance for housing, new car loans, personal loans and credit cards.
After bankruptcy your credit report won’t look positive. However, you can take steps to repair it over time. The key is to make sure that you build trust by managing your finances well and always paying your bills on time.
Here’s an example of what you could do to begin demonstrating your good personal financial management capabilities:
- Open a bank account as a first step,
- Apply for a credit card and once approved, use it sparingly. Keep your balance low and make sure that you pay it on time every month,
- Avoid high interest loans like personal loans and high interest payday loans, and
- Establish a budget for your income and expenses and stick to it! The key is to ensure that your income exceeds your expenses each month and deposit at least some of the balance into your new savings account. That will show that you are able to save.
Read our article on financial management and budgeting for more on that topic.
There is life after bankruptcy for Australians. In fact for many people who have experienced years of financial hardship and the stresses and strains that accompany this, life after bankruptcy can be a big improvement. If you think that bankruptcy might be the right thing for you, you can call one of our friendly consultants today. They can step you through the process and answer any of your questions. Call today on 1300 871 319.