For some people bankruptcy can be a VERY serious and financially dangerous situation to be in. So if you are considering going bankrupt or bankruptcy proceedings are being made out against you, you should not just rely on this site!! Do as much research as you can before it is too late.
What is Bankruptcy?
Bankruptcy is a legal way of getting your debts wiped out. Bankruptcy is a debt solution, but in some cases the consequences of going bankrupt can be rather severe. There are a number of other debt solutions out there, maybe one of them is better for you than bankruptcy. As the opening statement says, do some research into other debt solutions that may suite you better.
How Long Does Bankruptcy Last?
The statuary period for a bankruptcy is 12 month. It is possible that you may be discharge from bankruptcy in as little as two months, depending on your situation. Once discharged you no longer have to abide by the restrictions of a bankruptcy.
What are the Effects of Going Bankrupt
In simple terms, it allows you to rid yourself of debt and make a fresh start. However, if you do go bankrupt there are restrictions attached to going bankrupt. If you declare yourself bankrupt or made bankrupt, all your assets including your home will be managed by a trustee. They are in a position to liquidate your assets (e.g sell your home, if there is any equity). The funds generated by the trustee will then be distributed amongst your creditors. Also this will be used to pay the trustees fees, which sometimes can be quite hefty.
Who Can Apply for Bankruptcy
Bankruptcy can be filed by anyone, including members of a partnership. However, be aware that the procedure of dealing with partnerships and companies wanting to file for bankruptcy will be a different procedure.
What Assets are Safe in a Bankruptcy
Some assets are safe in a bankruptcy, normally items and other assets that are required for everyday living. Tools of the trade are often excluded as they would be considered items that are required for the bankrupt to continue trading. It is worth researching what item and up to what value are excluded. A new motor for example may have to be sold, as a cheaper car will suffice?? Also, your income may have deductions made, once an in depth financial fact find has been carried out. Any additional funds realised will be passed onto creditors and pay trustee fees.
Are Bankruptcies Public
All details of a bankruptcy are a matter for public record, with the exception of confidential information. Notification of a bankruptcy is published in the paper. Also there are electronic online systems that can be searched to see if a person has been made bankrupt.
When is a Bankruptcy More Favourable?
There are certain circumstance that are more favourable to individuals when going bankrupt.
- Having No Assets
- Living in Rented Accommodation or with family of friends
- Having a Job that would not be affected by going bankrupt
How to File for Bankruptcy
Filing for bankruptcy in the UK is a fairly simple process. You will need to complete a bankruptcy form and submit it to the High Court in London, or a local County Court nearest to you. You must show that you are unable to pay your debts (this will be reflected in the income and expenditure) There is also a fee to pay. I would suggest that a quick search will give you the current fee for going bankrupt. It ain’t cheap!! I believe that it can also be completed electronically here: https://apply-for-bankruptcy.service.gov.uk/ The Bankruptcy Petition form 6.27 and the Statement of Affairs 6.28 will need to be completed.
Are There Alternatives to Bankruptcy
There are alternatives to bankruptcy and they too should be considered. Some of the alternative are: IVA (Individual Voluntary Agreement), an IPP (Informal Payment Plan), and a DMP (Debt Management Plan). If you are thinking of an IVA, then you may want to consider reading some of these, as an IVA can be even worse for you: http://www.johnnydebt.co.uk/?s=iva+
Debt Advice Handbook
If you are in debt and looking a for an excellent factual book relating to debt and the law, then I would recommend the Debt Advice Handbook listed below:
|Debt Advice Handbook To understand the law relating to Debt, this is a must have book! It contains the essential information needed by advisers dealing with debt problems.|
|Defending Possession Proceedings: is the key ‘homelessness prevention’ handbook|
|How to Get Out of Debt is an eight-stage strategy that enables readers to pay off debt and fix their finances for good. This book has it all covered.|
|How to Live for Free - I have done a full review on the book here: How to Live for Free|
|The Money Diet - revised and updated: The ultimate guide to shedding pounds off your bills and saving money on everything!|
|Bankruptcy, Insolvency an the Law is a concise guide to the processes underpinning bankruptcy and personal insolvency.|