Picture credit: Philip Taylor
Hi Julie,
A burning question…how did you bounce back from bankruptcy after divorce? My divorce 5 years ago left me with nothing and I went bankrupt. I’ve managed to clear my debts since but I don’t know what my next step from here should be. – Sonia
Hi Sonia,
Bouncing back from bankruptcy is a long process that takes a lot of hard work and patience.
Honestly, I found that life after bankruptcy felt mighty unfair in the beginning! Even though the worst was behind me and I had endured years of financial hardship, my bankruptcy still seemed to follow me around wherever I went. I’d be lying if I said that your experience will be different…you probably still have a lot of frustration ahead. But there are a few ways that you can make the transition that bit smoother.
Don’t allow bankruptcy to impact your sense of self
I know how awful it feels personally to go bankrupt. After all of your hard work, you can view yourself as a failure. But you know what? We are far from alone in going bankrupt. Between 25 000 and 30 000 Australians declare bankruptcy every year. While this statistic isn’t the brightest to quote, it also goes to show that bankruptcy isn’t an isolated experience.
Never forget that we are more than our money.
Review your credit report
Bankruptcy scars your credit rating – there’s no doubt about it. But sometimes incorrect information can end up on your credit report. Review your file and make sure that you aren’t being misrepresented. Sometimes basic details like when you filed or when you were discharged from bankruptcy may be incorrect. It is always worth the time to review your rating and ensure that it accurately reflects your financial situation – both present and past.
Steadily rebuild your credit rating
I’m sure you know by now how restricted bankruptcy can make you feel. While avoiding credit altogether will keep you out of financial trouble again, it will also mean that your credit position will hardly improve.
To make some inroads, it may be worth applying for a credit card with a low monthly allowance and paying it off on time, consistently. For peace of mind you may even consider applying for a secured credit card, where you pay your monthly cap in advance. This will allow you to build up your credit rating without over-committing.
Don’t accept loans from shady creditors
Gaining credit after bankruptcy is a difficult process – and some creditors know this all too well. They offer lines of credit to those who other institutions may reject, but they also charge high interest and lock you in to impossible contracts. Don’t allow your vulnerability to be exploited by shady creditors: always deal with reputable institutions and do your homework first.
Get a professional opinion
While there is ample info online from people like me, a financial planner or accountant who specialises in bankruptcy will ultimately be your best help in bouncing back. Yes, the hourly rate for a pro is hefty – but a good accountant will more than pay for themselves through the financial strategy that they help you to implement.
For more info on bankruptcy, check our our full bankruptcy section on the site, or head to the AFSA website.
Thanks for getting in touch, and all the best in bouncing back from bankruptcy.
With every good wish,
Julie
