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 What is Bankruptcy?

Bankruptcy occurs when your liabilities are greater than your assets; basically when you cannot pay your debts as and when they fall due. There are three ways to be made bankrupt. You can apply to be made bankrupt yourself, known as Voluntary bankruptcy, a company that you owe at least £750 to can make you bankrupt, known as involuntary bankruptcy or you can be made bankrupt by the supervisor of an IVA or the Trustee of a Trust Deed.

 
What are the benefits of Bankruptcy?
 
  • No longer have to deal with creditors
  • Usually automatically discharged after one year
 
What are the disadvantages of Bankruptcy?
 
  • Social stigma
  • Your credit file will be impaired for many years
  • You lose control of your assets including your home
  • You cannot act as a company director
  • You cannot work in certain public positions
  • The bankruptcy will be publicised
  • You cannot obtain credit of more than £250 without permission
 
Bankruptcy is an option that should only be considered as a last resort. You should always seek expert advice before considering declaring yourself bankrupt. 
 
What to do next?
 
If you are looking for help with debt then before proceeding with any solution you need to ensure that you have fully explored and understand all of the other options available to you. There are a number of non-for-profit organisations that can give you guidance in these areas. A comprehensive list of these organisations can be found at the end of this guide. Do not rush into bankruptcy, this is the last report. Speak to an expert and understand your options before committing.
 

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2009-04-17 14:57:19 © Moneyextra.com



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