Bankruptcy
Bankruptcy information for those who are considering their options, when investigating debt management and the alternatives. Find out what Bankruptcy is and equally how to apply / recover from a bankruptcy petition - How to avoid Bankruptcy.
Filing for personal bankruptcy could protect you from creditors that you owe money to. But seek professional advise from a bankruptcy adviser before you make any final decisions.
Bankruptcy is often seen as a method to gain protection from out of control debts. It takes removes your debts so that you may start a fresh with your finances; but beware it leaves a fair share of disruption. Bankruptcy is the usually the final straw for the majority of people and a savior for others, who have very little to loose.
A bankruptcy order is granted by the court when it receives a petition for bankruptcy (application) from a debtor or one, or more of their creditors. The eventual court order transfers responsibility for creditors to the Official Receiver who takes control of the debtor's money and assets, distributing them fairly to all of the creditors. Once all debts have been paid or written off, or an agreement reached; the individual is able to make reasonably fresh financial start.
One can apply for voluntary bankruptcy by visiting their local court office and picking up a bankruptcy application pack. It is strongly recommended that any potential bankruptcy applicant seeks professional advice pre application, as there are alternatives that will often have less of an impact, like the following debt solutions:-
Bankruptcy Advice
- Citizen's Advice Bureau
- Government Insolvency Service
- National Debt Line
- Consumer Credit Counseling Service
Advantages of Bankruptcy
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Further court action against you, to recover money may be stopped.
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You no longer have to deal with you creditors. They will be dealt with by the receiver.
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You will be allowed to retain a certain amount of money from your wages or assets and often household items, to give you a reasonable standard of living.
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You will be able to make a fresh start, when the bankruptcy order has been canceled.
- Your debts may be written off. Relieving the previous financial pressures.
Read More on the Advantages of Bankruptcy
Disadvantages of Bankruptcy
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If you apply for voluntary bankruptcy you often have to pay a court fee of up to approximately £475 for the bankruptcy order.
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Not all debts can be written off - e.g. court fines.
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Your details will be entered onto a public register of bankrupt individuals, or often published in the local newspaper so other people may learn of the recent bankruptcy.
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You may lose your home or any possessions that are considered luxuries, as they will have to be sold to repay your debts.
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You won't be able to apply for any further credit while the bankruptcy order is active and undischarged.
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If you own a business, it could be closed down and the assets sold. So check your liabilities.
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You may be subject to a bankruptcy restriction order, which can make it very difficult to take out credit or other financial products.
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You could lose your job depending on your employer and what profession you work in - such as accountants and financial advisers, which is completely understandable, (other professions can also be effected, so check this out).
Read More about the Dis-Advantages of Bankruptcy
Planning Bankruptcy?
If you are planning to file bankruptcy then there are certain things that you should keep in mind.
The very first thing that you should do is get in touch with a solicitor who specialises in bankruptcy. You will require specialist advice from someone who knows exactly what is required and what steps you need to follow.
When you first meet, take along all of your financial papers, including bills that you owe, a verification of your income, and bank statements.
Be very clear and forthright in calculating your entire debts, even the small ones.
Bankruptcy is a long and a tedious process. It may affect your financial outlook for years. So make sure that this is the correct decision for your needs.
Alternatives to bankruptcy
If your debts haven't gone too far down the line, it is often possible to come to an informal arrangement with your creditors, allowing you to repay your debt in a manageable way.
You can try to negotiate a debt repayment plan with affordable regular installments. It can often cost more in interest for the long term, but it can often be a more suitable option than bankruptcy.
If you are unable to arrange a payment plan you have the option of entering into a more formal, legally binding arrangement called an Individual Voluntary Arrangement (IVA). You will need the services of an insolvency practitioner to arrange this.
Alternatively, insolvency practitioners also offer debt management plans, in which they take on management of your debts for a fee, and will have slightly more weight than organising the solution your self.