Approximately 104,000 people file for bankruptcy in the UK every year.
Is bankruptcy a last ditch effort at staying afloat or a wise financial move? The answer to that question depends on your personal financial situation. Because there’s so much misinformation surrounding insolvency, let’s first cover what bankruptcy is (and isn’t).
Credit Repair after Bankruptcy
In a nutshell, bankruptcy is a way to protect you against your creditors if you’re not able to pay your debts. If your outgoings are exceeding your monthly income and you’re struggling to, or unable to meet your financial obligations, then considering bankruptcy can be a wise move.
While being “free” of your old debts can sound appealing, bankruptcy is a serious decision and has important downsides to be aware of. The first of which is that your assets can potentially become sold off by the bankruptcy Trustee (Official receiver) so that your creditors can recoup some of the monies owed. It’s in these cases that it’s beneficial to have expert guidance to ensure that your bankruptcy best serves you and not your creditors.
Previously, in some situations where the Official Receiver deemed that the case has been investigated fully and no further action was to be taken, the Insolvency Service would offer the person in bankruptcy an “early discharge”. This meant that your bankruptcy would last for less than the 12 months and a common timescale was around 8 to 9 months. This process has now stopped and all bankruptcy cases now last at least 12 months (the standard duration).Once you are discharged from bankruptcy you are then back to normal (unless you have had a payment order or a bankruptcy restriction order applied) and need to look at rebuilding your credit profile.
As for things such as bedding, clothing and white goods, none of this is at risk. No one comes to your house to take the clothes off your back. When it comes to bankruptcy the assets the courts really care about are vehicles, savings, equity in houses/apartments and land.
Once you’ve made the decision to file for bankruptcy, you need to make it official by filing your online bankruptcy application. You can do this yourself if you feel confident, but it may help you to consider contracting the services of a professional bankruptcy service.
Bankruptcy-Explained are able to help stop creditors from harassing you at home or at work, advise you on how to deal with bailiffs (rule of thumb: don’t let them in!)and complete the necessary application.
Is This Your Best Option?
The best way to determine whether or not bankruptcy makes sense for you is to consult with a financial professional. We have experts available that you can have an initial free consultation with. Because they’ve dealt with hundreds of cases before they’re able to give you a professional, unbiased and experienced perspective on how to best leverage your current circumstances to your benefit.
The decision of whether or not to file for bankruptcy isn’t easy. Get in touch with a professional planner today so you can make the best decision for you.