We all want stability in our lives, especially now with our fragile economy. We often turn to our credit cards, as a means of escape from a bill or payment. But soon debts can start to mount and before you know it debt collectors start to hassle you with calls and letters. If you are knee deep in debt, the most extreme option available to you may be bankruptcy.

Bankruptcy in the UK, as amended under the Enterprise Act 2002 will normally last no longer than 12 months, if all obligations are met. It acts as a practical way of dealing with debts that you cannot pay. Once you become bankrupt, you are freed from these debts and can make a fresh start (subject to some restriction).

However, bankruptcy is not a financial agreement to be taken light-heartedly. You will be required to give up assets, which may include valuable possessions and you will lose any interest you may have on your home. If your bankruptcy correlates with your business, then you will almost certainly be closed down and the dismissal of any employees will follow.

Benefits of Bankruptcy
Bankruptcy can provide peace of mind, with the elimination of debt and stress of having to cough up the repayments. Below are some more benefits of declaring bankruptcy:

  • Bankruptcy can free you from overwhelming debts, so you can make a fresh start, although some restrictions will apply after the 12 month period
  • All your assets will be shared out equally among your creditors
  • Bankruptcy can provide relative peace of mind and a possible automatic discharge after one year (over even less in some cases)

Anyone can go bankrupt, including individual members of a partnership. There are different insolvency procedures for dealing with companies and for partnerships themselves.

Implications of Bankruptcy
Bankruptcy is a serious matter, and once you declare yourself bankrupt it can have long-term implications. These implications can include the following:

  • Your bankruptcy may be published in the newspaper
  • Any business you own will be closed and employees dismissed
  • You will lose any assets of real value including your home, life insurance and possibly pension
  • You will lose professional status and some employment opportunities will be prejudiced
  • All your creditors will be immediately informed
  • You will also be required to fill in numerous forms and have a meeting with an Official Receiver or Trustee in Bankruptcy who will thoroughly investigate your affairs
  • When you become bankrupt a full investigation of your affairs will be carried out
  • You will also be prevented from obtaining credit for over £500 without the permission from the lender

Bankruptcy is serious and is defined by the Insolvency Act and Enterprise Act in England and Wales. It is seldom an easy way out and it is vital to explore alternatives, like an IVA- Individual Voluntary Arrangement.

If you are considering bankruptcy, need advice or alternative solutions, please contact us today. We offer professional financial advice on the best options open to you.

For more information on bankruptcy, give us a call on FREEPHONE 0800 158 3539 and our friendly, professional staff who will highly respect your confidentiality, will be willing to help.