Bankruptcy

Hello and welcome to my latest blog. For today’s instalment I am going to be talking about bankruptcy. I want to continue on with the journey of making everyone savvy with all issues relating to debt and getting out of it.

Bankruptcy is usually thought of as the last resort in solving financial problems. From my past experience, whenever the word is mentioned people get instantly scared and go into a bit of a panic.

In the past Bankruptcy has always carried a stigma with it, it has always been thought of as a big no no, or not something that should be done easily. However over recent years, with more and more people experiencing problems with debt, it has become more acceptable for someone to become bankrupt.

In a nutshell you would either register for bankruptcy yourself or one of your creditors would petition for bankruptcy in order for them to attempt to get the money that is owed to them. You would usually have greater debts than you do assets meaning that you are insolvent. When you are made bankrupt you will be relieved of all of your unsecured debts.

The bankruptcy will usually last for one year, however you could be required to pay an Income Payment Order or IPO which could last for three years and this is where you pay your surplus income into the bankruptcy to pay something to your creditors. At the end of the term your debts become ‘discharged’ meaning that the balance will be cleared and you will no longer be liable for paying anything to the creditors. For the duration of the bankruptcy you will be assigned an Official Receiver or (OR) who will be in charge of your case and will oversee everything. One of the important roles of the OR will be to protect any assets that you may have such as a car, house or motorhome. They will also be asked to investigate your debts, how and why the money was spent and what else has been done with the funds.

All assets are at risk when going bankrupt such as your house, car, motorhome or any household possession. Your creditors would seek anything that they deem to be of excessive value. However your creditors cannot ask you to sell any equipment that is needed for work purposes or household items such as clothing, bedding, furniture that is needed by the family.

The bankruptcy order will remain on your credit reference file for six years, after that you will have a ‘fresh start’. However the bankruptcy could have certain restrictions relating to the job you can do, or what credit you can take out in future.

Bankruptcy doesn’t have to be all bad, look at this list of people who were made bankrupt and have gone on to do bigger and better things and learned from their mistakes is the past.

Donald Trump

Walt Disney

Elton John

Simon Cowell

Peter Jones

For further information on Bankruptcy click here and follow the links.

Hopefully this has helped clear up bankruptcy for you a little. If you do have any queries about anything you can always ask and remember our helpline number is 0800 2802816.

Don’t forget you can find me on Twitter and Facebook

Written by davemac on January 18th, 2011

Filed Under  debt advice, debt help, Debt News, Payplan   |  Trackback  |   2 Comments

Andrew Smith (@Andrew_F_Smith) says

I am really interested in a couple of things revealed by the latest bankruptcy statistics. First that around a third of all bankrupts are now subject to an Income Payments Order or Agreement (usually an “agreement” I guess) and second that the number of people being pushed into bankruptcy, whilst still a small minority, is going up.

I blogged about this, here: http://www.cleardebt.co.uk/blog/q3-2011-insolvency-figures-is-bankruptcy-still-an-easy-option_42132

Stuart says

It might also be worth pointing out that the risk of being stigmatised by bankruptcy is now much reduced by it not being advertised in the local press anymore.

View the original article here

Posted in: Bankruptcy