Are You Considering Bankruptcy?

If you are considering bankruptcy as a way of debt management then you should be aware of what it actually entails. It is not the easy solution to break free of unmanageable debt that you might believe it to be. Many would have you believe that if you take bankruptcy you are able to write off enormous debts and be simply debt free. There are many downsides to declaring bankruptcy and there could be more viable solutions such as an IVA or a consolidation loan. If you are in debt above your head and you can no longer manage to maintain the repayments or just barely hanging on by a thread to keep your head above water then you need to do something. However bankruptcy should only generally be considered as the last resort.

One of the things you should realise, and why you have to do something when you are in debt, is that your creditors can apply to make you bankrupt if you owe over £750 in debt and cannot repay it. In this case of course you would have no option or choice; however you could be the one that initiates bankruptcy also.

• If you are made bankrupt it would be listed in your local newspaper and there is a stigma attached to being made bankrupt which can stick with you a very long time
  
• Your assets would be at risk and these could include your home, your possessions and any savings you have.
  
• You will not be able to have certain jobs or standings in the community which would include MP, councillor or even a child minder.
  
• Your credit file would be affected as bankruptcy is recorded on it and this means that borrowing in the future could be almost impossible

• You are generally only bankrupt for one year after which time you are free to get on with your life
  

As you can see the downside to taking bankruptcy as an option far outweighs any pros to taking this as an option to becoming debt free.

After weighing up the alternative options and deciding that bankruptcy is the most suitable option for your needs there would be certain steps that have to be taken in order for proceedings to go ahead. Here they are explained:

• You would first have to make a petition to your local County court. You would be expected to pay court administration costs and other fees which you could expect to total over £450. The fees would include a deposit which could not be waived, whereas the others could be waived at the courts discretion
• The petition form is designed with the business person in mind as they are the majority of individuals who declare bankruptcy. However despite your status you would have to complete this form and hand it in to your local court with bankruptcy jurisdiction. The form will require such information from you as your mortgage details, the value of any property you have, and information regarding any secured loans
• Following submission of the form there will be a court hearing and the case could be turned over to what is known as an insolvency practitioner who will consider an IVA instead if for example your debts are under £20,000 and assets of at least £2,000. Your order could be dismissed in favour of the IVA.

As you can see there is a great deal to consider when thinking of declaring bankruptcy. If this is an option you are thinking of taking then it is essential to speak to a debt advisor before going ahead. They will be able to answer all of your debt questions and help you to consider other options which could be more suitable.