So what is bankruptcy? Well, firstly, bankruptcy does not apply to companies but to individuals. Secondly, bankruptcy can be your decision or it can be the decision of a creditor. Bankruptcy is not a ‘get-out-of-jail-free-card’ it is a huge life decision. Your bankruptcy will be on your record for a long time after it occurs. If you are considering applying for bankruptcy you should be considering it as a last resort, definitely not as an easy option. If you are not considering going bankrupt but a creditor is attempting to make you bankrupt it is advisable to get some legal advice. A creditor can only attempt to bankrupt you if you owe them over £750.
In terms of applying for bankruptcy – initially you should contact someone to discuss your financial situation. You may be able to get free advice from the Citizen’s Advice Bureau. Bankruptcy may be a viable option for you if either it will take many years for you to be able to be completely debt free, or if you have no money available to pay the debts that you owe.
When you are made bankrupt you will no longer be in control of your finances and assets and you will also no longer be in contact with the individuals or companies that are trying to collect your debt repayments from you. This will continue for approximately a year following the bankruptcy. You will be absolutely unable to apply for any more credit during this time and the only money you will have access to will be a small amount to live upon. An Official Receiver will be in charge of your property and money.
You must be aware that whilst you are bankrupt you will be extremely likely to lose your home and many personally valuable possessions – some of these may be irreplaceable but these decisions will be beyond your control. Some of your debts will be written off but not necessarily all of them. Furthermore, the cost of going bankrupt is not small – at a potential total of £700. On top of these distinct disadvantages of going bankrupt you may find that depending upon the career you have you may not be able to carry on working if you have been declared bankrupt. In all cases, your bankrupt status will be entirely public and will be easily accessible on the internet. Furthermore, in severe cases you will find that your finances can be restricted for fifteen years. Seek legal advice rapidly if you are dealing with the prospect of bankruptcy.
If you would like more financial information based on what you’ve read here about bankruptcy, please don’t hesitate to get in touch with us at Roskell Davies.
(All information applies to the bankruptcy process in England and Wales)