Bankruptcy

Declaring Bankruptcy is the debt solution of last resort. Before considering bankruptcy as an option you should first look at the alternatives, namely an IVA (Individual Voluntary Arrangement) which is another form of insolvency under which your assets (such as your home) can be protected.

If no other solution can be could and you are forced to declare yourself bankrupt then all of your debts will be cleared (apart from student loans), but there are serious consequences.

What are the Consequences of Declaring Bankruptcy?

• It is possible that your assets (home, car, high value consumer, insurance and endowment policies) could be sold off in order to pay your creditors
• Your bank accounts will be closed and your credit cards terminated
• Your bankruptcy will be announced publicly
• Any businesses you own are likely to be shut down
• You will not be able to serve as a company director without court permission
• There are restrictions on the kind of work you can do in the future
• You will find it very difficult to access financial services in the future (more difficult than it would be under an IVA)

Advantages of Bankruptcy

All your debts will be written off (after your assets have been sold off to pay creditors and there is nothing left). The timeframe for Bankruptcy proceedings is usually relatively short (12 months), however, depending on circumstances this can be increased for up to 15 years.

Bankruptcy can be used even if you are unemployed or on benefits, whereas an IVA usually requires you to be working, so that you can pay off the agreed portion of your debt.

When Is Bankruptcy the Better Option?

This is a difficult question. To find out which solution is best for you, you should contact us for free advice. Generally speaking though, bankruptcy suits people who:

• Have no other alternative and have been refused an IVA and are completely unable to repay their debts
• Have no assets. If you have no assets then you have less to lose in bankruptcy proceedings
• Do not envisage themselves needing to serve as a company director in the future
• Do not have a profitable business (which is really just another asset)
• Are not employed in a sector where bankruptcy would prohibit them from working
• Will not be adversely affected by the public announcement of their bankruptcy

If you need further advice on bankruptcy, debt management or an IVA then please contact us either on the number above, or complete this form to request free debt advice .