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Bankruptcy
What are the effect of bankruptcy?
What is bankruptcy?
Bankruptcy can occur when an individual's debts are greater than his or her assets. Declaring bankruptcy means an individual is financially insolvent and can be relieved of outstanding debts. It is often considered as a last resort.
Key points about bankruptcy
- Bankruptcy usually lasts for a year.
- At the end of the bankruptcy period, most debts are cancelled but there are restrictions on obtaining credit and working in certain professions.
- An Official Receiver is appointed to protect your assets and investigate the cause of your bankruptcy.
What are the effects of bankruptcy?
- If you are declared bankrupt, you are no longer liable for any outstanding debts documented in the bankruptcy proceedings. This can give you peace of mind and alleviate stress.
- Your assets will be shared out between creditors. However, it doesn't come without implications.
The disadvantages of bankruptcy
- The Official Receiver can sell any of your assets: this includes your family home, your car and any of your household effects (if they are deemed to be of excessive value).
- You will be obliged to declare you are bankrupt if you apply for credit in excess of £500.
- You are excluded from occupations and professions, such as the Police Force, Armed Forces, Local Council and Government Offices.
- You will be unable to act as the director of a company.
- You cannot take any part in the promotion, formation or management of a limited company without the permission of the court.
- You cannot trade in any business under any other name unless you inform all persons concerned of the bankruptcy.
- There may be restrictions on you practising as an Accountant/Solicitor.
- If a Bankruptcy Restriction Order is granted:
- You cannot become a Member of Parliament.
- You cannot act as a Justice of the Peace (JP) or Governor of a School.
- You cannot become a member of the Local Authority.
- The bankruptcy order remains on your credit reference file for six years.
- Any member of your family, or even your employer, could be publicly examined in court if the Official Receiver believes this will aid the investigation
- Your name will appear in the local newspaper under the bankruptcy notices section.
Discuss Further
If you would like to discuss an individual voluntary arrangement further and speak to a skilled debt management adviser then please contact 08445 888 930.