Posted by admin in Bankruptcy often comes with quite negative connotations, particularly if you’ve read or heard about it in the media.
Whilst it’s true that entering bankruptcy is a ‘last resort’ for borrowers having serious problems repaying their unsecured debts, for some people it can be the most suitable approach.
Becoming bankrupt would only ever be considered appropriate once all other debt solutions have been looked at.
You can visit http://www.debtadvicenow.co.uk/bankruptcy-advice/ for more information. Here we’ll take a basic look at what bankruptcy involves.
What is bankruptcy?
Bankruptcy is a form of insolvency. It’s designed to help people who have a significant amount of unsecured debt, but who can’t afford to repay it in the foreseeable future.
Bankruptcy usually lasts for a 12-month period. During this time, you’ll make monthly repayments based on what you can afford after you’ve covered all your essential monthly costs (rent/mortgage, food, bills). You’ll also be protected from any further legal action from your unsecured lenders whilst you’re bankrupt.
After a year, any outstanding unsecured debts you can’t afford to repay will be written off once you’ve been discharged (normally after a year) – although you may have to make repayments of as much as you can afford for up to three years afterwards.
Once you’ve entered bankruptcy, you’ll have to hand over rights to your ‘estate’ – in other words, your home and any other valuables you have – to an Official Receiver, who may arrange to have these items sold, and the funds put towards your debts.
Bankruptcy will also show up on your credit file for six years, which is likely to make getting further credit difficult during this time.
Is bankruptcy right for me?
Although bankruptcy will have a serious impact on your finances, it could also give you a way of getting on top of your debts – and help you to make a new start with your finances for the future.
But keep in mind that it only deals with unsecured debts. If all your problems are with secured debts (e.g. a mortgage), you may have to consider another solution.
If you think bankruptcy could be suitable for you, be sure to get some bankruptcy advice before making any firm decisions.