Bankruptcy: it’s a word nearly everyone is familiar with but very few people understand what it actually means.
If you are facing Bankruptcy, undoubtedly you may be worried about what the future may hold and feel embarrassed about the problems you have experienced. However, you are not alone; many famous individuals such as Martine McCutcheon and Kerry Katona in the past became bankrupt at some point and today more than ever before, it doesn’t need to leave a permanent blight on your life.
With the UK facing the prospect of a triple dip recession, the economy remains more fragile than ever before and if Britain loses its AAA credit rating, the chances are there will be an even greater impact on households all around the country.
According to debt charity, Credit Action, 1,607 workers were made redundant every day between the months of August and October, a staggeringly high number which shows no sign of slowing down. Credit Action also recorded that during the same period, 904,000 people had been out of work for a year or longer.
This means that more and more workers are being faced with the problem of redundancy but with the amount of competition in the market and the scarcity of jobs, are simply unable to find something new. It doesn’t take a genius to work out that this situation is going to lead to substantial financial problems before too long.
What Bankruptcy could mean for you
Bankruptcy today no longer has the stigma it used to. However, it’s not the only way to deal with financial trouble as you could get out of debt with other options such as Debt management Plans, Individual Voluntary Arrangements, Protected Trust Deeds and Debt Relief Orders that can help you to clear debt without such severe repercussions as Bankruptcy.
If you are facing Bankruptcy, there is no doubt there will be a significant impact on your life but the good news is that this doesn’t last forever. Your finances will be assessed by the court and you will be instructed to hand over all details, plus details of your debts and assets, to the Official Receiver.
If you own your own property, there is a chance it will be sold repay money to your lenders. Contrary to popular opinion, even if you have children, the same consequences will apply. However, the court is not unreasonable and will ensure you have plenty of time to find alternative accommodation; you won’t simply be thrown out on the street.
Once you have been declared bankrupt, you will be subject to a number of different conditions until you are discharged; this includes clauses such as not taking out finance without disclosing your Bankruptcy and a ban on acting as a company director.
After 12 months, you are normally granted a full discharge from Bankruptcy although this can occur earlier if your debts are repaid more quickly. After this time, many of the conditions are lifted unless the court believes you have not complied with the conditions of your Bankruptcy, in which case the Official Receiver can ask them to be extended.
Once you have been discharged, you can breathe a sigh of relief and begin rebuilding your life piece by piece. Your Bankruptcy will continue to have a large influence for several years and you may find it difficult to get finance or even open a bank account without shopping around.
However, once you have been discharged the worst is over and gradually you can put your financial difficulties behind you and focus on rebuilding your credit history.
There are many celebrities who have had to deal with Bankruptcy in a very public arena in recent years; perhaps the most talked-about is ex-Atomic Kitten singer, Kerry Katona. However, she has a lot of company. Mike Tyson and even Walt Disney have all had to face going bust during their lives.
Being declared bankrupt is a huge step and not one which should be taken lightly. However, for some people this is the only suitable solution and can give them the fresh start they need to rebuild their lives and their finances.