Effects of Bankruptcy

Effects of Bankruptcy

The implications of the bankruptcy process can be quite serious so it’s very important to consider all of the possible consequences before you settle on it as a solution to your debt problem. It might be the first thing that you think of when there appears to be no other way out of the spiral of mounting debt but it is important to view it as the last resort. Look to the alternatives before you make a final decision. Get advice on the alternatives and see whether you would be better to consider one of them. More often than not, an IVA will provide a real alternative to insolvency. The Individual Voluntary Arrangement is a less severe method by which to free yourself from debt, while avoiding the consequences of bankruptcy.

The following are some of the consequences of bankruptcy that you would be recommended to take into consideration before settling on insolvency as a debt solution. For more advice on any of these points and how they’ll affect someone in your circumstances, talk to one of the dedicated debt advisors at Debtsolver.

Obviously, the key consequence of bankruptcy is positive; you become debt free. However, as immediately appealing as this is, consider its effect on your Credit Rating, your Assets, your Employment and your Reputation.

Whenever you attempt to secure any form of credit in excess of £500, it is a legal requirement to declare your insolvent status. This leaves a lasting impression of your Credit Rating.

When you are declared bankrupt, a Trustee takes charge of selling your assets to repay your creditors. If you’re a homeowner, this includes your home. The effect of bankruptcy on your credit rating can then make it very difficult to get a new property. Even if you are simply a tenant, you might struggle to meet a deposit if you can’t secure credit.

A Bankruptcy Order has a huge effect if you run your own business too. For starters, your business will be closed and your staff will lose their jobs. Any assets will then be sold off by the Trustee. You can start up in business again but there are rules that you’ll have to follow, like trading under the same name as the one which was liquidated.

Once you’ve been declared bankrupt, you can’t be a company director, an MP, a councillor, an estate agent or a magistrate. It’ll also hamper any effort to get a job in anything law or accountancy related.

Bankruptcy is a matter of public record, the proceedings take place in open court and it’s published in the local papers and in the London Gazette.

If you would like more information, ring Debtsolver now on Telephone 08000 434 336 (Free for UK residents only) or complete our debt management wizard to see if you qualify