About...Bankruptcy

Sometimes bankruptcy has to be considered as the only viable option. This option has to be potentially considered if there is simply no way of repaying your priority debts or parts of them. It is, however, a very serious step and a decision which may result in you losing control of your assets immediately or into the future.

Bankruptcy is sometimes made out to be a painless option, but we believe it  should be your action of last resort.

By going bankrupt, which is relatively straightforward, you will free yourself from debts. Unfortunately, assets you have (including your house) may be lost in the process. Additionally, some debts are not written off. The bigger issues with bankruptcy can occur over the longer term.

We would recommend that you investigate all other options very thoroughly before deciding to go into bankruptcy for the following reasons:

1. Bankruptcy is NOT an easy option
It’s true that your bankruptcy could be discharged within 12 months, but you may not be able to get credit again for up to 6 years. Even then, you’re likely to pay a lot more to borrow money because you represent a greater than average risk to a lender.

2. It actually COSTS money to go bankrupt
You need £460 to cover court costs and the Official Receiver’s fee – and it has to be paid in cash.

3. You STILL have to pay your creditors even if you go bankrupt
If you have any assets, such as a house, they may be sold to pay your creditors. If you are deemed to have more monthly income than you need to live on, some of the surplus may also be paid to your creditors for up to three years.

4. You CAN’T keep bankruptcy a secret
Bankruptcy orders are published in the London Gazette and local newspapers. The information is also displayed on the Individual Insolvency Register – which is accessible on the internet – for a period of 3 months after you are discharged.

5. Your CREDIT file is affected for 6 years
After bankruptcy you are likely to find it difficult to get credit – including loans and credit cards – even a mobile phone.

Source Equifax 24/05/06