Bankruptcy
Description
Declaring yourself bankrupt should be considered as a last resort, when you have
no disposable income to pay your creditors. Whilst you are bankrupt any assets
that you have might be used to pay off your debts. After a period of time which could be soon as one year all of your outstanding debts are written off and you can make a fresh start.
Eligibility
A creditor can make you bankrupt if you owe £750 or more
to that creditor and you have not been able to agree how to repay the debt.
You can also be made bankrupt if your individual voluntary arrangement fails.
Advantages
- Bankruptcy takes the pressure off you as your creditors will not be able to
chase you once filed.
- All of your debt will be written off providing you with a fresh start.
Any personal or occupational pensions you have should be unaffected.
Disadvantages
- You lose control of all your assets which includes them being sold to pay your
creditors.
- It restricts your ability to obtain credit in the future without
permission from the lenderand your credit rating can be affected for many years
after the annulment.
- You cannot act as a company director or take part in the formation/management
of a limited company (without the permission of the court) and finally you may
not practice as a chartered accountant or a lawyer.
- There may be a clause in any hire purchase agreements that you have to terminate
them if you become bankrupt.
- There will be a fee to pay with your application.
Please remember there are alternatives to bankruptcy so please consider these other options and only declare bankruptcy if you are certain it is the right solution.
