Being in debt can be incredibly stressful and worrying, potentially having long-term implications for both mental and physical health. Resolving debt problems quickly and efficiently is therefore of vital importance for a large number of individuals across the UK. In this article one of the most high-profile debt solution options will be investigated: Bankruptcy.
This may be used as a debt solution when an individual is unable to pay off their debt. Either they voluntarily file a petition for bankruptcy with the courts or their creditors can file one on their behalf. Once they have been declared bankrupt, all of their bank accounts and credit cards will be closed and the individual in question may be required to sell some of their unnecessary assets to help pay off the debt.
However, this form of debt solution comes with very serious implications and should therefore not be considered lightly. It is important for any individual to get the best personal bankruptcy advice available before filing a petition. Although a bankruptcy will only last one year, the record will stay on your credit files for six years and besides trouble taking out credit in future, you could be faced with difficulty in the job market as a number of sectors may not employ people who is either in an un-discharged bankruptcy or has been declared bankrupt in the past.
There are numerous companies who are able to offer expert advice and potentially introduce the individual in debt to a range of alternative debt solutions, such as the less drastic Individual Voluntary Arrangement (IVA).
Who Can Go Bankrupt?
Personal bankruptcy becomes a possibility when debt repayments to creditors can no longer be met and debt levels are beyond management through other methods. If this situation arises an individual can then either voluntarily file for bankruptcy, or their creditors can file a petition with the courts on their behalf.
How Long Will It Last?
In most cases, bankruptcy will last for a year. However, it is possible for an individual to be required to make monthly payments from their income to their trustee for a longer period. If this is the case, these payments will usually continue for a period of three years, and the details of which will stay on an individual’s credit file for a total of six years.
When petitioning for personal bankruptcy, an individual’s Official Receiver will need to be informed about all of their assets. It will be up to them whether any of these assets can be retained. Although they will be able to keep necessities, such as tools required for their job, pension funds, clothes and household goods needed for basic living, the individual in debt will probably be required to give up your unnecessary goods. These could include an expensive car, boats and vacation homes.
Once you one has been declared bankrupt, all of their bank accounts and credit cards will be closed. The news of the bankruptcy may be announced in the local newspaper and difficulty may be faced in the search for future employment as numerous job sectors, including the Police, Prison officers, the Armed Forces, Accountants, Solicitors and others in the financial sector, largely refuse to employ someone who is in an un-discharged bankruptcy or has been declared bankrupt in the past.
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