IVA & Debt Consolidation Advice

Can a local council force an individual into bankruptcy because they failed to pay their council tax? Will others know that you have gone bankrupt? Does a bankruptcy show in your credit file? Will filing bankruptcy affect your chances of finding a job?

According to the latest report, there was another steep rise in the number of people with county court judgments registered against them in 2006—a total of nearly 850,000 consumers. With more consumers incurring these judgements, many will see bankruptcy as an easy way to escape the CCJs.

For the first time in the UK, reports showed that more than 100,000 people filed for bankruptcy in 2006. In addition, government figures showed that 15,356 people filed bankruptcy and 11,299 filed IVAs during the first quarter of 2007.

Online credit information provider, Equifax, has expressed concerns that many consumers are unaware of the implications of filing bankruptcy, but rather see it as an easy way to get out of debt without any real consequences.

The 2002 Enterprise Act changed the law where the debt's of a bankrupt individual could be written off after one year instead of three, however, this change caused a number of people who had been struggling with debts to view bankruptcy as an attractive option for wiping the slate clean and starting over. What they don't understand is that even though the bankruptcy will be cleared after one year, the record of the bankruptcy filing will remain on their credit file for six years, which could have serious implications on their financial futures.

Lenders use an individual's credit file when they review an application for credit or loans. A record of bankruptcy can cause them to be declined or force them to pay a premium interest rate. It can also affect a person's ability to get a job or even a mobile phone since a credit agreement is taken out for line rental.