Advantages of Bankruptcy
- A ‘light at the end of the tunnel’ – a date when you know you’ll have repaid your debts
- Peace of mind
- Protection from creditors
- No further liability to your creditors
- A chance to make a new start
Disadvantages of Bankruptcy
- Your credit rating will be negatively affected for six years after your bankruptcy.
- Personal bankruptcy will be placed on a public Insolvency Register.
- Your home is likely to be sold unless you have little or no equity in the property.
- Cars over the value of £3,000 are usually sold, however, if a friend or relative pays the difference then it’s possible to keep it.
- You’ll be left with few or no assets of value.
- Some jobs are affected by bankruptcy, for example, you won’t be able to work as a company director or be involved with the management of a limited company while you’re bankrupt. You can also no longer practice as a solicitor, accountant or in other financial services.
- It comes with a cost – you will need to pay £680 to go bankrupt.
This is a voluntary bankruptcy, however, there is also an involuntary bankruptcy which means any of your creditors can petition for your bankruptcy if you owe them £5000 or more. The team at Michael Alan can assist you in applying for your bankruptcy petition if you decide that it’s the right solution for you.
Is bankruptcy right for me?
While it should be considered very carefully and as a last resort, bankruptcy is the best way out of debt for some people. It all depends on your situation – bankruptcy might be right for you, if you:
- have a limited disposable income,
- don’t think your financial situation will improve in the short to medium term
- can’t repay your debt within a realistic timeframe
- own few assets, and
- have already considered other debt solutions
There are some things to consider before deciding to go bankrupt:
- Any valuable assets, including your home, may be sold so the funds can go towards repaying your creditors
- You will not be able to work in some professions e.g. as a company director or local government councillor
- Your bankruptcy will be advertised in newspapers
- Bankruptcy is a formal, court-driven process
- Bankruptcy will affect your credit rating for 6 years
Please note that MA Finance do not charge any fees what so ever for the advice of bankruptcy and debt relief order applications.