Write Off Unaffordable Unsecured Debts
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Understanding What Bankruptcy Is Really About...
Going bankrupt is a major life-changing event with serious consequences. Some people think of it as an easy way of starting again, but that doesn't give it the respect it deserves. Bankruptcy is by no means an easy solution to dealing with unaffordable debt.
What exactly is bankruptcy?
If you have debt you cannot pay, bankruptcy can release you from the stress of dealing with unpleasant and persistent creditors, and can write off part or all of what you owe. However this does not mean that your life will continue pretty much as normal just without the stress. Part of being declared bankrupt means handing over your assets to an insolvency practitioner to ensure each creditor receives a fair – but usually vastly reduced - amount of the debt you owe, and that can involve a great deal of upheaval in your life. You will essentially be starting again.
Bankruptcy – the easy option right?
The thought that you could wipe out a lot of your debt and get the creditors off you back may be very tempting, but the consequences of bankruptcy are far-reaching and you need to weigh up the options before you go ahead.
Bankruptcy tells the world you cannot pay your debts so lending you money is not a good idea. You will have problems getting credit in the future for as long as six years afterwards as the bankruptcy is recorded on your credit file. At the moment you may feel that's not an issue, but in three or four years time your circumstances may change and the restrictions could prevent you from getting on with your life. For example, you may want to buy a house but no lender is willing to give you a mortgage. You may be required to have a credit card to book and pay for a holiday, but again no-one may be willing to give you one.
Bankruptcy is also a legal process that takes place through court hearings, and there are rules you must adhere to, some of which you may not like very much. An Official Receiver will look into your financial affairs to ensure you have not committed a criminal offence in connection with your bankruptcy. You must attend meetings as they require and fully disclose your financial details to them. A Trustee will take possession of any assets you have and sell them to release money to your creditors. This could involve selling your home, even if you own your home with someone else, and this could put a stressful burden on your relationship with your partner or spouse.
For all of this though, bankruptcy can be a very useful debt solution. By the time you've reached the point where you are considering bankruptcy for yourself or one of your creditors has started bankruptcy proceedings, life may have become for yourself and/or your family so difficult that it may be the best option open to you.
Is bankruptcy right for you?
What ever you decide to do, you must take in-depth advice from professionals to ensure you understand what you are about to embark upon. Talking to other people who have faced bankruptcy can be useful, but it's important to remember not to base your decision on their experience. While every bankruptcy has a fixed procedure to follow to ensure there can be no legal challenge to its validity from creditors, everyone's experience is different due to their individual circumstances.
Many people associate bankruptcy with a 'throwing in the towel' and refuse to even contemplate it, even though it may be the only option that is the most appropriate. In some circumstances after taking advice, you and your bankruptcy adviser may decide that a Trust Deed or a Debt Management Plan provides a more flexible option, especially if your circumstances change for the better while you are considering your options and it looks increasingly like you will be able to pay back your creditors at some point in the future.
To talk to someone free and confidentially about bankruptcy and what it could mean for you, call 0800 043 2027 now. Please don't delay. Bankruptcy is a legal process and once court proceedings are in motion it can be difficult to stop them. Pick up the phone now.