Free advice from Access Debt Solutions on avoiding bankruptcy.
Bankruptcy is often seen as the easy way out of debt but it may not be the right solution for your circumstances and consideration should be given to the following:
The positives of bankruptcy:
- Deals with creditor demands and prevents further harrassment.
- Creditors recognise that they will not be paid in full and, once discharged, the debts are written off and cannot be pursued further.
- The affairs of the bankrupt are dealt with by a nominated third party who deals with the administration.
- The cost of bankruptcy is less than with an IVA.
The negatives of bankruptcy:
- Any assets of any value (property, shares, insurance policies) will be sold to pay creditors.
- Any assets that maybe acquired during the term of the bankruptcy, such as inheritances, insurance payouts/maturities, windfalls and possibly pension income will be used to pay creditors.
- Even after being discharged, bankruptcy can affect the ability to obtain finance on reasonable terms.
- Bankruptcy is always advertised in the London Gazette and the local press where you live.
- Notification is made to everyone financially connected. Your bank, building society and creditors will be informed immediately. All credit registers will hold the information against your name.
- Bankrupts cannot run a business. If the business is successful it could be sold.
- Bank accounts and credit cards will be closed. Anything that is being purchased by lease or Higher Purchase, such as your car, will be immediately returned to its owner.
- Cannot hold certain employment positions such as an MP, councillor, magistrate or practice certain professions such as a solicitor or an accountant ater having been declared bankrupt.
- Can be expensive as all fees must be paid from the sale of assets.
Follow the links below for further detail on other debt options for sole traders and partnerships: