Knowing When to Choose Bankruptcy

If you have reached a point with your debts where you can no longer make repayments you may be considering bankruptcy. You do not have to own a business to apply for bankruptcy; this is an option open to anyone so long as they qualify in regards to certain conditions. It needs to be kept in mind that this should only ever be chosen as a last resort. There are ramifications for going bankrupt, and you should avoid these if at all possible.

Things to Consider Before Choosing Bankruptcy

Here are a few of the alternatives you should consider before choosing bankruptcy.

• If you can borrow money from family and friends then this is preferable to choosing bankruptcy.
• You should consider approaching a debt management company to see if they will be able to offer some advice. One option is a debt management plan. This is where you agree to pay the most you can afford over a three year period. This will usually mean that you pay back a lot less than what you actually owe. The ramifications of choosing a debt management plan are a lot less than going bankrupt.
• Another option is an individual voluntary arrangement (IVA). This is a formal agreement between you and your creditors where you agree to pay back a certain amount each month. In Scotland this is known as a Trust Deed.

What You Need to Know About Bankruptcy

Here are some of the things you need to know about bankruptcy:

• In order to go bankrupt you must owe at least £750
• Your creditor can apply to have you declared bankrupt if they feel that this is the only way of reclaiming some of their losses.
• You need to petition a court if you want to be made bankrupt. It involves spending a bit of money.
• Once you declare bankruptcy you are legally obliged to follow the instruction of the court. It is up to the court to decide how your remaining assets will be divided among your creditors.
• If you attempt to hide any assets around the time of bankruptcy it could put you in very deep legal hot water.
• You will be expected to hand over your bank and credit cards to an official receiver.
• There will be an insolvency practitioner appointed to take charge of your assets.
• If you have a regular income then some of these may be taken in order to pay back your creditors.
• It can be very difficult for you to borrow money again in the future. This can make life difficult in a world where so many of us rely on borrowing money for big purchases.
• If you have been declared bankrupt you will not be allowed to work in certain professions.
• Your bankruptcy will be made public in the London Gazette.
• Once you have been declared bankrupt your creditors will need to deal with the insolvency officials and not you.