Bankruptcy

Bankruptcy is a legal term used for an individual or business who cannot afford to pay there debts back to their creditors. Creditors may file a bankruptcy petition against a debtor in an attempt to regain all or part of what they are owed. If a debtor is declared bankrupt with debts, its will mean they will have to hand over their assets to their Trustee. This can include your savings, personal possessions like your car or form of transport and even your home. The Trustee, this can be a Bankruptcy accountant or a licensed Insolvency Practitioner, will then value your estate and possessions and look to sell them at auction to recover the debts.

The consequences of Bankruptcy are severe and no one should apply for it without seeking advice from a professional debt advisor. Bankruptcy has a bad stigma attached to it and most people will try and avoid it at all costs. Please note, bankruptcy should only be a last resort. For more advice contact the Insolvency Service at www.insolvency.gov.uk.

Bankruptcy advantages

Peace of mind Possible automatic discharge after one year

Bankruptcy disadvantages

You may lose your home or assets If you are an accountant or lawyer, you are forbidden to continue practising, so you will need to find a new line of work Obtaining credit will be a problem. Any applications over £250 will require permission from the lender You cannot act as a company director You financial and personal details may be examined in court You must have the permission of the court if you want to start a limited company or be involved at management level You cannot trade under any other name unless you inform all persons involved with the bankruptcy You may not become a member or part of the local authority Your credit can be affected for up to six years after the filing of bankruptcy

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