Bankruptcy Advantages and Disadvantages – Bankruptcy represents a ‘Fresh Start’. The ability to clear all unmanageable debt, ( There are certain exceptions that cannot be included , such as maintenance and court fines, and Student Loans. You can apply to Experians Credit Expert which will assist in identifying what your credit score is and what you will need to do to increase it). You can run your own business as a Sole Trader. You are only bankrupt in the UK. You are automatically discharged from bankruptcy in 12 months. Your name is removed from the Insolvency Register 3 months later. Bankruptcy is often seen as the fastest way out of debt. It eliminates debt immediately, unlike other debt solutions such as IVAs and Debt Management Plans which can drag on for years.
The first question you should ask yourself is:
What have you got to lose? – If considering bankruptcy you will soon realise that during the process of you considering bankruptcy there will be questions about bankruptcy that you will be asking yourself, and anyone else who is likely to be affected by your decision to go bankrupt.
Are you a home owner- If there is equity in the property then in Bankruptcy a Trustee will have 3 years from the date of your bankruptcy to acquire the equity either by a forced sale. Or if the property is in joint names and only one of the owners is entering bankruptcy then a 3rd party can purchase what is known as acquiring the beneficial interest in the property from the Official Receiver or Trustee.
PPI: Most people don’t particularly value PPI repayments until they are staggered by the amounts of money they receive. If you are 40+ and have run into difficulties with debt but in your past you repaid loans, credit cards and finance agreements then it really is a must to look into PPI. You don’t actually have to do a lot to get the information needed. Most Experian Credit checks will provide a financial foot print of everywhere you have been. A good claims handler can take it from there. You could be entitled to monies that are greater than what you owe.
Do you own items that have a significant value that you can afford to lose, such as vehicles, valuable items of jewellery, antiques, collectables, or excessive tools of trade if you are self employed?
Are you in an occupation that would be effected if you are bankrupt? Independant Financial Advisors, anyone with a consumer credit license or ministry of justice license, MP’s, Estate Agents,Book Makers, Some positions in the Forces can be affected and permission from senior management or a commanding officer may be required.
If you are in in your mind that you can navigate your way through the above then its fair to say that bankruptcy could be a good option for you.
The Disadvantages of bankruptcy
The disadvantages of bankruptcy are quite simply that you will have to make adjustments and considerations in ways that you have not exercised before.
People are different and the disadvantages are generally those p[people who are afraid of change. People that are afraid of the process and who don’t understand what has happened. coming to terms with the change of financial freedoms that you may have enjoyed previously but actually couldn’t afford. So for whatever the reasons are you have spent considerably more money on farming or cultivating survival and lifestyle. If you have a family around you then this can be very difficult because the access to the money you once had will be closed and you will have to find an alternative way of making money or surviving whatever your choice is.
Under the spirit of the act bankruptcy is a ‘Fresh Start’. Disadvantages only really occur when you stop trying, or enter a confused and helpless state of mind. Be strong… Nothing in life is easy!
Therefore it makes sense that facing bankruptcy is a test of your resolve. Working together if you are in a dependant relationship can be difficult, but critical if you are to survive the adjustments that you will need to be making.
It is important that you have everything that you need when you enter bankruptcy, then it is actually quite straight forward. The most important thing to have is the knowledge of what you can and cant do. Once you understand this then you can operate quite safely within the framework.
if you in a position where you are one of those people that finds it incredibly difficult to face the facts that you are responsible for the position that you have ended up in. even if it is the fault of a 3rd party who has failed to carry out a duty for you, then this will be a disadvantage, because you need to accept responsibility for the position you have ended up in, and find ways of resolving the mistakes and take a focussed and planned route for your business and financial aspect of your life for the future.
So the disadvantages of bankruptcy are really getting your head around whats happening and making good solid decisions as to how you are going to navigate yourself from now onwards.