What is Bankruptcy?
Bankruptcy is an option open to UK individuals and households who are insolvent (in other words, people who cannot pay off their debts). You can file for bankruptcy voluntarily, or it can be asked for by a creditor if you owe more than £750.
Growing numbers of people are seeking alternatives to bankruptcy in the UK because it is an extreme option, with implications that many wish to avoid. Homes and cars are usually taken away and sold to pay creditors and it can be extremely difficult to get credit or a mortgage after bankruptcy.
When is Bankruptcy Suitable?
As a general rule, you should do whatever is possible to avoid bankruptcy, many people find that options such as an IVA are in fact better suited to their circumstances. We will always work hard to explore every option open to you so that bankruptcy is a last resort.
However, there are circumstances when bankruptcy can be the only choice. In particular, you may need to consider it seriously if:
- There is no chance of being able to set up an alternative such as an IVA
- You have no assets and no available income
- If your employment / tenancy agreement will not be affected
The main benefit of bankruptcy is that your debt problems are resolved and restrictions placed on you last generally for 36 months. Monthly payments during the bankruptcy are set at an affordable level.
There are, however, many drawbacks:
- You may have to sell your home and other assets such as cars
- You cannot get credit during the period of bankruptcy
- Credit is very difficult or expensive to get afterwards
- A Bankruptcy Order is controlled by the Official Receiver and the court magistrate
- A bankrupt cannot have certain careers or be a director of a company
- Your situation will be made public
We can help you to establish whether or not bankruptcy is the best choice for you. If it is, you can be sure of a clear and impartial answer. Call our advisors today or complete the request a call back form to the right of this page to receive a call from one of our advisors.
