Bankruptcy

A lot of people are facing financial problems at the moment and some are in much worse situations than others. Having to deal with creditors and mounting bills is no laughing matter. It can cause sleepless nights and health problems such as stress and anxiety. And for many people these debt problems can leave them in such a panic that they don't know how to cope. Sadly there are some individuals who don't realise that there are a number of things you can do to alleviate your situation.

You may have heard of bankruptcy before but it may have been in association with a large company. During the recent recession a number of companies "went bust" or filed for bankruptcy but there are many individuals who have to file for bankruptcy too. Bankruptcy might be the best option for some people as it may seem like the only way to relive a huge financial burden that is slowly getting worse and worse.

When you file for bankruptcy you are declaring to your creditors that you will not be able to meet your financial commitments. When you are actually declared bankrupt, your debts will be written off. This might sound like a great idea to some people who want to address their debt but it is important to note that it is not as straightforward as it sounds.

In order to file for bankruptcy you will have to complete a debtor's petition and you will have to prove that you are unable to pay off your debts. You will no longer have your debt when you are made bankrupt but all your assets will be shared among your creditors. You will also have to provide your accounts for the past three years if you have been running a business.

Before you take any steps to make yourself bankrupt, you will need to get some advice. Not only will it help you to understand the procedure but it is actually a condition as the ruling judge will want to know that you completely understand what you are doing. If you decide to declare yourself bankrupt, there may not be any going back.

There are many consequences of filing for bankruptcy. Even if you have been declared bankrupt, you may have to continue paying towards your debts for three years under an 'income payments agreement'. You may find it difficult to obtain a free bank account, you will lose all control of your assets and you may lose your home. You will find that the bankruptcy order will stay on your credit report for six years which will affect any future borrowing and there are some professions that you cannot enter if you have ever been made bankrupt. So before you decide to take this course of action you should think long and hard. An IVA is considered to be an alternative solution with less drastic consequences.