Bankruptcy As A Solution
Truths & Myths
Before you even know it, debt can spiral out of control and leave you in an unstable financial position. It is common to find those suffering with debt relate the problem to unforeseen circumstances such as issues with business, unexpected redundancy, illness, a relationship breakup or unemployment. All of this can leave you with a mountain of debt whilst you struggle to cope with menacing phone calls and threatening letters demanding money you simply don’t have available. Despite this being a stressful time that you can initially see no way out of, there is a solution in the form of bankruptcy.
We call on the assistance of Claire Simmons and Paul Reynolds at Debt Management Helpline UK Ltd when it comes to bankruptcy. We trust them to always offer insightful advice in this particular area and as their service extends to court attendance, there is a hand held service available along every step of your journey.
Bankruptcy is legal protection for you as the ‘Debtor’ as being declared bankrupt automatically makes it illegal for creditors to hassle you in any way; therefore relieving a certain level of stress associated with the situation.
If you live in Scotland there are important differences between bankruptcy as a debt solution within Scotland compared to those in England and Wales. Click on the words bankruptcy within Scotland
Bankruptcy as a Debt Solution
This is controversial and generates mixed reactions however most of the problem is due to the situation being misunderstood. Our main aim is inform you of the misunderstandings and myths involved with bankruptcy by explaining what actually happens throughout the process.
What’s worrying about Bankruptcy
Through plentiful amounts of research and by talking to a large number of people, the most worrying aspect of bankruptcy is often the word itself, Bankrupt. This need not be the case though as bankruptcy is fast becoming an acceptable debt solution and once you start to understand the process better, you may discover that it is in fact the best solution to your debt problem.
The misconceptions surrounding what may be lost and what is protected in Bankruptcy
Being declared certainly doesn’t automatically result in you losing your job, home or car etc. If you are lucky enough to have expensive belongings or antique treasures, it is likely that you wouldn’t need to declare yourself bankrupt in the first place, however if you did, there is a strong possibility that these will need to be given up to your creditor. In contrast, your rare pedigree dog or plasma TV hanging from your wall are of no consequence when declaring yourself bankrupt and will not be taken. You will not have your passport taken off you either so can still go on holiday, whilst also being able to get married and continue to run a business. If you are still concerned about certain myths, don’t hesitate to give us a call on 01623 551133.
What debts are included and excluded in Bankruptcy
All unsecured debt, with some exceptions will be included in bankruptcy. Furthermore, over drafts, personal loans, Income Tax and VAT, utility bills, credit card debts, negative equity in the sale of a repossessed property, rent arrears and most other unsecured debts will also fail into bankruptcy. Fines, some council tax and a few other debts may be exempt. Secured debts however fall outside of bankruptcy. As an example, a home you wish to retain is outside of bankruptcy as long as you can keep up with the repayments on your mortgage.
There are some restrictions when you are declared bankrupt and those include not being able to open a bank account with a credit facility, work as an MP or borrow more than £500 without declaring that you are bankrupt first. There are some other occupations that you may not be able to work in however we will inform you of those professions affected.
How long will I be an un-discharged Bankrupt
Bankruptcy lasts for a maximum period of 12 months.
Will my credit rating be affected?
Your credit rating will be affected however it will be no worse than in an IVA. Over time, you will be able to restore your credit history and rating to its original position.
As with any debt solution, there are serious implications that make bankruptcy something that should not be taken lightly. Gaining the correct advice is vitally important so call the AMS Debt Doctor team on 01623 551133 to discover the solution which will be best suited to your position.
The Facts About Bankruptcy!
Bankruptcy should only be used in extreme circumstances and where all other avenues have been exhausted.
Bankruptcy is a public process and your assets and disposable income are converted into cash to repay some of or all of your outstanding credit commitments to your creditors.
This section offers you an overview of the Bankruptcy process. If you have any questions regarding bankruptcy, please contact our advisors on 01623 551133 who will answer any questions that you might have.
How Does Bankruptcy Work?
Bankruptcy is a last resort for those who are insolvent, which means they are unable to pay back their debts.
A Bankruptcy Order is filed by either the individual or the lender at a county court. An Official Receiver finds out details of the debt and how it happened, which takes place through a course of meetings where the debtor must give information about their debt as well as their assets.
The bankruptcy order lasts between 12 – 36 months, lump sums will be made to creditors either through selling assets or contributions from income.
Details of the bankruptcy will be published in local newspapers and recorded on the Insolvency Register and with Credit Reference Agencies. During the bankruptcy there are many restrictions, such as all bank accounts will be closed.
It is important to remember that there are other alternatives to bankruptcy. IVAs were introduced by the Government so that people could avoid having to declare themselves bankrupt. Please see our IVA page for more information.
If you find yourself in serious financial difficulties and want further bankruptcy information, please give AMS a call on 01623 551133 and let one of our specialist advisors help you through this stressful time.