An Introduction to bankruptcy

Bankruptcy is often seen as the last resort in solving any debt issues, but I do not subscribe to this. In a related article I will take you through the pros and cons of bankruptcy, and the myths of an IVA which is often touted as the debt solution to take. Please read these and it will become apparent that bankruptcy has been and remains a far more utilised debt solution than the IVA.

The consequences of becoming bankrupt may mean you lose your house, it could prevent you from pursuing certain careers and, for example, prevent you from becoming a company director for the period of time that you are bankrupt. Having said that, the severity and stigma of bankruptcy has lessened over time and it is now far more acceptable than it used to be. This year some 80,000 individuals will become bankrupt.

Bankruptcy can be a daunting experience. There are however companies that specialise in taking customers through the bankruptcy process, even attending court with you if necessary. Faced with a statement of affairs of 35 pages which needs to be completed in triplicate can be an unnerving proposition. Advice from an expert as to whether bankruptcy is the right route, and then someone to fill in the forms and help you file them at court and then attend with you is something to be considered

How do I know if I need to pursue the bankruptcy option?

The easy way to find out is to call one an expert debt advisor. They will, very quickly, get to understand your current financial position and advise the best way to solve your situation. The conversation is completely confidential, free of charge and without obligation. You should choose someone who is not allied to either a Debt management company or an IVA firm as they will generally push you to the solution which is best for them commission wise.

What is bankruptcy?

Bankruptcy means that all your debts (subject to a very few minor exceptions) are written off on the instant you are made bankrupt. If you have disposable income you may be required to pay this to the Official Receiver for a maximum of three years. However as part of what an advisor does is to configure your disposable income to reduce as much as possible the potential of having to make income payments. You will generally be discharged from bankruptcy in a year or less. If you have equity in your property or valuable assets you may have to release these to the Official Receiver. Although in the vast majority of cases I have seen this year, with very little if any equity in property, homes can be transferred from the Official Receiver back to the bankrupt for his fees, of about £400.