Bankruptcy and How to
Become Bankrupt
You can declare yourself bankrupt as a way to deal with
the debts that you have amassed over time. Bankruptcy should
really be treated as an absolute last resort option.
Bankruptcy will affect your future financial options in many
aspects of your personal and business life.
In 2004 the law concerning bankruptcy changed and so allowed
personal bankruptcy to become a lot easier. The change in
the law also allowed a bankrupt to be discharged from
bankruptcy sometimes in as little as a year.
There are a lot of other options in dealing with debt that
should be looked at before looking at the bankruptcy route.
If you decide to down the bankruptcy route then you will
more than likely lose most of your belongings, investments
and your house. Your business could be closed as well.
Since your home is probably the largest asset that you have,
it is likely that this would be sold off to pay back the
creditors money that you owe. Your family may not thank you
for losing the family home, but it may be the only thing
that you can do as a last resort.
Being a bankrupt means that you will have trouble gaining
other credit for 15 years following the action. This could
have the affect that you cannot obtain a mortgage for
another home.
Bankruptcy best suits people with large debts, no income and
probably no assets. People with a family, large equity in
their home and certain professionals would do best to find
other options that bankruptcy. A solicitor for example might
have trouble using his qualifications if bankrupt.
Treat bankruptcy as a last resort, and if you can go for
other options it would be more preferable in most
situations. Consider having an Individual Voluntary
Arrangement (IVA) with your creditors. Doing this allows you
to come to an agreement with your credits where you would
pay a percentage of the debt over a specified timeframe.
Using this approach will give you more flexibility with
gaining flexibility in future since you will not be classed
as bankrupt.
The cost of an IVA to be arranged can cost more than £2,500,
however this is likely to be a lot less than the overall
cost of being declared bankrupt. If you have a regular
income and can afford to keep up with repayments it would be
better than the bankrupt options. Using the services of an
insolvency practitioners they will probably steer you in the
direction of the IVA as the practice is likely to earn more
money from you than if you go bankrupt.
If you do decide to go bankrupt then you'll need to be aware
of the process involved.
First you need to go to a Citizens Advice Bureau, solicitor,
accountant or insolvency practitioner to get advice.
To declare yourself bankrupt you will need to contact the
local county court. The people at the court will tell you
where you would need to send the bankruptcy petition.
Other people or companies than yourself can issue
proceedings against you to petition for bankruptcy. You
could try to reach a settlement claim with the creditor
before the petition is due to be heard in court.
Once the bankruptcy petition is heard in court the
publication of your bankruptcy is published in the London
Gazette, and a local newspaper. The official receiver will
also inform local authorities, utility companies and courts.
The cost that would be payable to the court would be £310
which would cover the admin of bankruptcy, with fees if you
arent on income support of £140.
At this point the court appointed receiver will administer
the bankruptcy and assess what assets you have and pass them
to the creditors. Sometimes an insolvency practitioner is
appointed who does the same role as the receiver.
As a bankrupt you will be able to keep assets including
tools, vehicles and other things that allow you to carry on
working. You would also be able to keep certain household
items to allow day to day living.
There are certain restrictions that apply to you as a
bankrupt. This includes your ability to obtain credit in
excess of £250, being a director of a limited company unless
you have the courts permission to do so, and the inability
to hold certain public posts including school governor, a
trustee of a pension fund or Member of Parliament.
You are able to have a bank account, however, you are
supposed to tell the bank that you are a bankrupt. Doing so
it is likely that they will impose special conditions on
your bank accounts. If you accrue any savings in your bank
account it is likely that these would be taken by the
trustee of the bankruptcy as a way of paying of creditors.
External Links:
How to File Bankruptcy
Free Advice on Bankruptcy
and your Alternative options to
Bankruptcy.
www.IVA-Advice-Online.com
Ways to Avoid Bankruptcy
We can Help you Avoid Bankruptcy.
Is Bankruptcy the Right
Choice?
www.FreshFinance.net
Bankruptcy Advice?
Serious Debts Over £15,000?
Free Non Profit Advice. Call
Here.
www.DebtAdviceTrust.org/bankruptcy
UK Bankruptcy Advice
It's easier than you think to get out of debt.
Download free
debt advice report now.
www.finance-inc.co.uk
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