Bankruptcy is a formal insolvency route for individuals with
serious debts that they cannot afford to repay. It protects
you from your creditors and allows you to start afresh but
should only be considered as a last resort due to the serious
implications it has.
Subject to certain exemptions,
bankruptcy means your assets – such as some household
possessions, endowment policies, and pensions – are
sold off and the money used to pay your creditors. You will
also have to sell your home if there is a realisable value
that cannot be obtained in any other way.
Your situation is advertised in local
newspapers and bankruptcy brings with it other restrictions,
which include having your bank accounts and credit cards closed.
Your landlord will be informed and for certain professions you
run a risk of losing your job. Once discharged from bankruptcy
however, all your debts are written off.
Other implications involve quite
severe restrictions being placed on you in the future. It will
remain on your credit file for six years and can make it very
difficult for you to work with certain employers, to start up
or be involved in the management of a company, or to hold public
offices.
Bankruptcy is a severe last resort and is
usually only applied when no meaningful alternative can be
offered.
The equivalent for residents
of Scotland is called Sequestration, although there are important
differences.
Advantages
¤
your creditors can no longer
pursue you or take further legal action
¤
all your debts are written
off, allowing you to wipe the slate clean and start
afresh
¤
you can be discharged from
bankruptcy in less than a year
¤
formal restrictions last
for a maximum of 3 years
Disadvantages
¤
you risk losing your home
and other valuable assets being sold
¤
your bank accounts and
credit cards will be closed
¤
your situation is published
in local newspapers and on the government’s
website
¤
your credit rating is affected
for at least six years, making it very difficult
and expensive to borrow money or get a mortgage
¤
for certain professions
you risk losing your job, and the ability to act
as a company director
¤
there is usually a cost
associated with your application, payable to the
court
If you think bankruptcy might be right for you, or would simply
like to discuss the options available, then contact
us now for immediate help. Our friendly team of experts
will listen to your individual circumstances and provide you
with clear, honest and impartial advice. We are always happy
to help.
