publication date: Oct 15, 2012
author/source: Dean Dunham
What does it actually means to go bankrupt?
What are the effects? So here are the basic facts
that you need to know about bankruptcy
to make a decision whether to take such a step
is one way of dealing with debts
you cannot pay. The
1. free you from overwhelming debts
can make a fresh start, subject to some restrictions; and
2. make sure your assets are shared
fairly among your creditors
Anyone can go bankrupt
, including individual
of a partnership
. There are different insolvency procedures
with companies and for partnerships themselves.
How are you made bankrupt?
can be made bankrupt
What are the
implications of bankruptcy?
Voluntarily – by
you making yourself bankrupt; or
- Involuntarily – by
someone else that you owe more than £750 to making you bankrupt.
- You lose control of your assets.
- You cannot obtain credit for over £500 without telling
the creditor that you are bankrupt.
- You cannot act as a company director.
You are closely monitored by a trustee in
bankruptcy who effectively manages your affairs.
- You cannot take any part in the promotion,
formation or management of a limited company (LTD) without the permission of
affected. Even after the bankruptcy period
, you may find it
to obtain credit. The Official Receiver
does not send any form of
notice to credit reference agencies
. The agencies pick up information
other sources such as the Insolvency Register
, advertisements of bankruptcies
in newspapers and the Enforcement of Judgements Office
How long does
normally lasts for one year. After this time, you'll be "discharged
" from your
bankruptcy regardless of how much you still owe.
could happen earlier if you co-operate fully with the Official Receiver. However,
in a small number of cases and if you've behaved irresponsibly (for example, by
not cooperating), bankruptcy can last for much more than one year.
What are the advantages of bankruptcy?
For the person
provides relative peace of mind
and possible automatic
after one year (or less in some cases).
, bankruptcy allows a full investigation of the debtor's affairs
to be carried out.
Can I keep my car in bankruptcy?
can be allowed to keep a car in bankruptcy
but you have to show a need for a
car and the car must be of modest value.
Will I lose my house in bankruptcy?
can be allowed to keep your property in bankruptcy
, however this can be a
complicated procedure and it is best to speak to an expert to clarify your full
situation. Generally speaking, if the sale of the house
will not benefit your
creditors and you can show that you can continue to service the mortgage
is a chance that you will be able to keep your house.
Alternatives to bankruptcy
You don't have to
just because you're in debt.
You can try to make arrangements
with your creditors instead including:
agreements – you write to your creditors and try to agree a repayment timetable
voluntary arrangements (IVAs) - an insolvency practitioner helps you negotiate
orders – the Enforcement of Judgments Office(EJO) orders you to make payments,
which the EJO then distributes amongst your creditors
- Debt relief orders
if you cannot pay and owe not more than £15,000
A Debt Relief
is a formal insolvency process that is aimed at people who cannot pay
their debts and who have no assets, a low income, no other access to debt
relief and no prospect of the situation improving. If people do have assets, or
there is a possibility of an improvement in financial circumstances, a DRO is
not an appropriate solution.
For more information visit Dean's site - www.youandyourrights.co.uk