In this article, ‘Helen’, who’s been through bankruptcy, talks about what it’s like to be discharged from bankruptcy and what you may have to deal with.
What do you need to do after you’ve been discharged from bankruptcy?
Receiving your letter of discharge from bankruptcy is a major highlight and it marks a really important turning point psychologically. There are several things I’d advise you to do:
- Get a copy of your discharge certificate as soon as you’re entitled to it by visiting the county court which declared your bankruptcy and paying the appropriate fee.
SAVVY TIP: Being discharged from your bankruptcy is a change to your financial status for the better. For example you can become a company director (again), and your bank should certainly know you’ve been discharged from bankruptcy. They may be willing to give you a debit card account but you won’t qualify for a cheque account or overdraft facilities. There’s useful information on the Gov.uk website Guide to bankruptcy.
- Check your credit report. Do this a few weeks after your discharge from bankruptcy to ensure that the information held on file is correct and current. If it does not contain information that you are now discharged from your bankruptcy write to the four main credit referencing agencies (Crediva, Equifax, Experian, and TransUnion) with copies of your discharge certificate, and request that your file is updated without delay.
Picking up the pieces
You’ll find your life after bankruptcy easier if you can learn to live a more frugal existence. You will have to let go of attachments to fashionable brands of goods that are highly priced. The good news is that there are lots of things you can do free.
- Be selective with your friends. Lose friends if they put you under pressure to keep up with them and their latest material acquisitions.
- Learn basic budgeting. Know how much you have coming in and how much you spend. Get confident in managing your money. It’s tough and you may feel resentful about being so short of money, but it also gives you the chance to develop your skills and confidence as a money manager.
SAVVY TIP: There are quite a few user-friendly mobile phone apps, or you can set up Excel spreadsheets on your PC and use these to build evidence for yourself and others of your ability to balance your income and expenditure. It can act as a tremendous confidence booster.
- If you need it, borrow a small amount from your family. You may need a reserve fund for the most difficult periods. But set up a standing order to repay it — even if it’s a small amount each month.
- Be prepared to disclose your bankruptcy as part of any financial referencing process. The longer the time period between your bankruptcy and any application, the more likely you are likely to be considered creditworthy. Once discharged, the situation may improve slightly.
SAVVY TIP: Getting a mortgage will be virtually impossible during the six years when your bankruptcy is on your credit reference file.
- You don’t have to tell everyone. Tell those who don’t need to know that you’ve gone credit card free. Offer them cash or payment via a (pre-pay) card instead.
SAVVY TIP: Use cash to your advantage. You can often get great deals by offering to pay in cash.
- Open a savings account and start saving loose change. It really does mount up. You can open savings accounts with just £1.
- Make use of your local library. Use it to access a range of information, to borrow rather than buy DVDs and books and to get online.
- Keep paying for essential policies. You may have to freeze certain financial plans, like pensions, but keep important insurance policies going. Never be tempted to cut corners like not taxing and insuring your car.
- Learn to cook wholesome basic food. Use good quality ingredients and grow your own vegetables and herbs if you can.
- Sell off all unnecessary assets. You can raise money by selling furniture and clothes you no longer need.
- Exchange, trade and swap. Trade and swap with friends and neighbours and share skills with others rather than buying in help and people to do jobs for you.
SAVVY TIP: Life after bankruptcy can be a new start. It’s a chance for you to put an unhappy financial past behind you and to learn to have a new relationship with yourself, your money, and what wealth means to you.
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