What is Bankruptcy

An explanation of going bankrupt

Bankruptcy occurs when you become insolvent, which means you can no longer pay off your debts or creditors. It is an option individuals and households from the UK can either take voluntarily or if more than £750 is owed, it can be demanded by a creditor. Bankruptcy is ultimately a method of dealing with debts you cannot pay.

Bankruptcy as a debt solution

There are numerous solutions to dealing with your debts, with bankruptcy being the most drastic of these methods. Bankruptcy is also a rather prolonged process, the consequences of which may linger for a long period of time. Due to the nature of the process it is strongly advised that you seek professional advice when considering taking on bankruptcy so that you can more easily overcome the inevitable complications that come with the process. Typical complications that you should be aware of include property such as your home and cars being taken away from you as well as it being very difficult to get credit or a mortgage as a result of being bankrupt.

Individual Voluntary Agreement

If the prospect of this option seems too daunting, a common alternative which people take on is IVA, which in an Individual Voluntary Agreement. This is a legally binding agreement between you and your creditors whereby you are expected to pay what you can afford outside reasonable living costs. This arrangement normally lasts for about 5 years. However, it is important to know that bankruptcy may be the only option. For example, there may be no chance of taking an alternative option such as an IVA. You also have no choice but to enter bankruptcy if you have no assets, no available income, if you are retired or if you have no future need for credit.

Bankruptcy pros and cons

There are advantages to bankruptcy, however, such as the fact that all unsecured debts are written off (except for student loans). It also allows you to make a fresh start with your finances.    

Disadvantages include the possibility of selling your home and cars. You are also not permitted to get credit during bankruptcy or be a director of a company, for example. Your situation may also become public. 

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A quick guide to bankruptcy

Bankruptcy is a tough experience. When someone is made bankrupt, their possessions, home, income, in fact all their assets are used to pay their outstanding debts.

Bankruptcy solicitors

Facing bankruptcy can be a frightening experience. There are many complications involved that may leave you feeling confused and not knowing where to turn. Having a solicitor to guide you through the process can bear huge benefits.

Declaring yourself bankrupt

When an individual realises that they are about to go, or perhaps have already gone, bankrupt it can be hard to know where to go or what to do.