Bankruptcy

It is a way to deal with unmanageable debt that gives you a ‘fresh start’

It is a way to deal with unmanageable debt that gives you a ‘fresh start’

Bankruptcy

Bankruptcy is a form of insolvency and is usually a last resort for individuals who have serious debt and financial issues. Individuals who declare bankruptcy have generally exhausted all other debt solution procedures and it is deemed that bankruptcy is the best solution for their circumstances.

The basic idea of bankruptcy is to use your assets to pay your debts and any debts that cannot be paid will be ‘forgiven’. However, as with any debt solution, although bankruptcy may be a “God send” for a lot of people, it is not always the best way forward for everyone, and bankruptcy will have different implications for different people depending on their specific set of circumstances.

Most people are usually discharged from bankruptcy after 12 months, however you may be required to make income contributions for 3 years.

The cost to declare yourself bankrupt is £680.

Advantages of Bankruptcy

  • It is a way to deal with unmanageable debt that gives you a ‘fresh start’.

  • Unaffordable debt is written-off.
  • Creditors cannot take or continue any debt recovery action against you.
  • You will no longer have to deal with your creditors.

Disadvantages of Bankruptcy

  • You will lose control of your finances and assets.
  • Cost! It will currently cost you £680 to declare yourself bankrupt.
  • You may lose your home if you own it.
  • You may need to make income contributions for 3 years.
  • Details of your bankruptcy will be public information listed on the insolvency register.
  • You may lose your job depending on your profession and employment contract.

Bankruptcy can be a complex debt solution. Whether bankruptcy is the best solution for you would depend on your circumstances and will require specialist debt advice. Speak to one of our debt counsellors by clicking on the link below.