Benefits and effects of Bankruptcy

How going bankrupt can impact your life

If you’re suffering with debt and cannot repay creditors, then Bankruptcy could be the right solution for you – but it’s important to remember that there are other debt solutions available that could help.

Benefits of Bankruptcy

  • Frees you from the overwhelming pressure of debt
  • Clears unsecured debt after 12 months (restrictions apply)
  • Ensures assets are shared out fairly among creditors

For a personal, financial service that’s built around you, call Direct Debt Solutions today 0800 015 3135

Effect of Bankruptcy

Once you have petitioned for Bankruptcy, your assets will come under the control of your appointed Trustee / Official Receiver.  If you are a homeowner, this will include your property. You could be granted a period of 12 months to find a new home if you live with a partner and / or children.

At the end of this 12 month period, your home will be put up for sale to help repay the creditors you owe money to, unless a partner, relative or friend can buy your share of net worth of the property. Any assets of value could also be sold. Only assets required for a basic living will remain.

Other important effects of Bankruptcy:

  •  If you live in rented accommodation and are behind on your payments, your bankrupt status may mean that your landlord can commence a possession action of their property.
  • You could be required to still make repayments from your salary to your creditors for up to 3 years following discharge. This depends on your personal situation.
  • Bankruptcy could hinder your future career prospects. For example, you cannot become a company director or hold certain public offices. Other professions such as the legal and accountancy professions also impose restrictions on bankrupts. You should talk with your HR department if you are concerned.
  • Your credit rating will be affected in the long term and it will remain on your credit file for six years after completion. This means you will find it difficult to secure credit in the future. You will also have to declare that you have been made bankrupt if you apply for credit of £500 and more.
  • Bankruptcy details will be advertised in your local paper and can be viewed online at the Insolvency Service website.
  • Certain debts cannot be written off, such as fines, maintenance or child support, personal injury debt and fraud.
  • If you own a business, you could be required to sell it, and any available assets, to repay creditors.

Assets you can keep when filing for Bankruptcy

You will be allowed to keep important items such as household goods, furniture, bedding, children’s toys and books. You can keep tools if you need them for business purposes.

You will be able to keep a car if it is needed for essential use and providing it is low in value. You could be asked to trade your vehicle in for another model if it is considered to be too expensive.

Is Bankruptcy right for you?

Bankruptcy might seem like a quick fix, but its effects can last much longer than other acceptable forms of debt management.

You could lose your home, your assets and in some cases your job. You will also find it difficult to secure credit in the future.

For debt advice, call us on 0800 015 3135†.