Avoid the Stigma of Insolvency
Although insolvency is not as severe as it once was, it is still the debt solution of last resort. At one time, the bankruptcy term was five years and the effect of the order on your credit rating was even more long lasting. Now, in an effort to minimise the stress of the process, the term is usually complete within 12 months. In some cases, an Income Payment Order could be put in place to garnish your salary in further service of your outstanding debt but this is only in severe cases. There’s even a government proposal in place to allow individuals to petition for their own bankruptcy online. The aim of this proposal is to minimise the waiting period between making an initial petition and having your time in court, as in some areas of the UK, this can be as long as three months.
This obviously points to an increased number of people facing the threat of insolvency. However, even with insolvency affecting far more Brits than ever before, there is still a certain stigma surrounding the entire bankruptcy process. Your bankruptcy order is a matter of public record. As such, the details of your insolvency will be published in your local paper. It is understandable that the effect of the bankruptcy order should be recorded in your credit report. It’s only natural that any effort to secure credit in excess of £500 should require that you inform the lender of your insolvency. Also, if you were to approach a business to carry out works, it is understandable to expect that they be totally honest with you about any history of liquidation. It’s also understandable that the stigma surrounding it might put you off.
Even though there is less stigma surrounding insolvency, since a greater number of people understand the causes that can lead you there, bankruptcy is something that will always have that connotation. It is no way something to be celebrated, neither is it a quick fix or something to be taken lightly. It is the most severe debt solution on the market and should only be considered as a last resort, as it can cost your home and other assets and place limitations on your career choices. You should seek specialist debt advice about the alternative options that are open to you. An IVA would definitely be preferable as it’s a private agreement between you and your creditors. So, there’s no stigma about your peer group knowing your financial circumstances. The term is usually 5 years but after this time, the remainder of your debt is written off and your assets are safe from liquidation.
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