Bankruptcy carries many disadvantages and it is a process that will often prove highly disruptive to your lifestyle and financial status.

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The Loss Of All Assets

You will almost certainly lose all your assets that can be sold off.

Items exempt from Bankruptcy

  • Work Equipment
  • Basic Domestic Equipment

But do remember that you may have to exchange items for ones of a lower value, eg trading in the new BMW M3 for a more modest car like a second hand Fiesta.

Potential Loss of Your Home

If there is equity in your home, then your share of it is claimed as part of the bankruptcy. This may lead to the house being sold if you can't arrange from someone to buy out your share.

Even if the house is in your spouses/partner name, the bankruptcy Trustee may be able to claim it. Typically 50% of equity in the family home is available to the Trustee.

Potential Loss of Future Assets

Any asset(s) gained during bankruptcy have the potential to can be claimed by the Trustee. This included windfalls in general and anything bequested in a will. Something of little value at the time of the bankruptcy order, but rising in value may also be seized by the Trustee.

Bankruptcy Does Not Help Mortgage Arrears

If you have mortgage arrears, your home may still be repossessed by your mortgage lender

Bankruptcy Does Not Help Rent Arrears

A landlord can still be able to enforce a court order for none payment of rents. Also, becoming bankrupt may violate the terms of a tenancy agreement.

The Bankruptcy Process Can be Expensive

If you are subject to an bankruptcy order and seek to preserve an asset, for example a property, by settling the debts at this time, then you are likely to be charged the costs involved in the bankruptcy.

Closure or Sale of Business

If you run your own business and it is of value, it will be sold. Otherwise it will be shut down and all employees dismissed. This does not apply in the case of a self employed sole trader.

Investigation of Personal Finances

Your personal finances and your conduct in relation to them will be investigated by public officials. Becoming bankruptcy is not a crime, but if evidence of fraudulent for irregular activities are found, criminal proceedings may follow.

Effect on Credit After Bankruptcy

Your credit rating will continue to be adversely effected after bankruptcy discharge, disenfranchising you from financial products and services. You must declare you are a discharged bankrupt when applying for a mortgage at any time in the future. You may find it difficult to obtain a mortgage, especially at the most completive rates offered to other consumers. Discharged bankrupts may have problems opening the most basic of bank accounts.

Restrictions Whilst Bankrupt

While serving bankruptcy, there are restrictions on your financial activities and you will be barred from practicing some professions, hence you may loose your job. You may not be the director of a limited company. For more details see Bankruptcy Restrictions.

Bankruptcy Restriction Orders (BRO)

If the Trustee considers you to be blameworthy, reckless or dishonest in your financial affairs and this contributed to your bankruptcy, a Bankruptcy Restriction Order can be made against you. This prolongs restrictions on your activities.

Bankruptcy and Immigration Status

Your immigration status my be affected. If you think this my impact you, seek specialist advice.

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