What is Bankruptcy?

Bankruptcy is a severe consequence of debt and shouldn't be entered into lightly. However, for some people bankruptcy may be the only solution. It can be the best way to make a fresh start.

Bankruptcy is a legal declaration for people who cannot afford to pay their creditors. A state of Bankruptcy can be declared by creditors in an effort to reclaim in part money that is owed to them. A majority of Bankruptcy cases are initiated by the individuals who feel they cannot pay their debts.

What Is The Purpose Of Bankruptcy?

Bankruptcy's main purposes are:

• to give the individual or organisation a "clean slate" by relieving them of most of their debts
• to repay creditors at an amount you can afford

Should I Consider Bankruptcy?

If your debts are high and you have a low income, it maybe worth finding out about bankruptcy.

• Will your financial situation get better in the foreseeable future?
• Do you own your own property or other valuable assests?
• Will you be able to pay your debts within your contractual period?

If the answer to every question is "no", there's a good chance bankruptcy could be right for you.

What are the advantages of bankruptcy?

• Bankruptcy is legally binding so you know when you'll be debt free
• You'll be protected from legal action by your creditors
• Your stress levels may go down once you know your debt problems are being addressed
• The debt you can't afford to repay will be written off when you're discharged from bankruptcy (usually after 12 months)
• You'll be able to make a fresh start when your bankruptcy is finished

What are the disadvantages of bankruptcy?

• Your valuable assets, including your home, will almost certainly be sold, and the proceeds shared among your creditors
• Bankruptcy will prevent you from working in certain areas; you won't be able to work as a local government councillor, for example, or a company director
• Your bankruptcy will be advertised in local newspapers
• Bankruptcy is a form of insolvency - a formal, court-driven process
• Your bankruptcy will affect your credit rating for 6 years

If you are thinking about bankruptcy then you should always seek advice from a specialist first. Before making your decision, you should understand how bankruptcy will affect you, and how those consequences differ from those of the alternative debt solutions (see the list below).

If you would like to speak with one of our bankruptcy specialists, call us free on 0800 228 9893 - or use our call back form and we'll call you to discuss your options.

So, What Next?