What is Bankruptcy?
If you choose bankruptcy then all off you debt is removed and written off. However, it impacts your ability to receive credit in the future, not only that but your credit score is damaged. It can also impact your family, job and home. It is a type of insolvency.
Bankruptcy applies if you live in Northern Ireland, England or Wales. If you live in Scotland then you would apply for sequestration, this is the equivalent of bankruptcy in the rest of the UK. Understand that sequestration is similar to bankruptcy but, it has different implications on your life and ability to get credit. We will cover the basics of sequestration also.
Reminder: Do not consider bankruptcy as your first option their are many options available. Check out Debt Solutions for other ways to solve your debt issues. There are also many other available solutions that can be found through research online. Bankruptcy is a possible solution but, should only really be considered as a last resort. If you would like to find out if bankruptcy is the right solution for your situation then please call 0112 496 0919.
How do I know if Bankruptcy is a suitable option?
Bankruptcy is usually considered when you have debt which is required to be paid in a time frame that is impossible given your financial situation. It is a type of insolvency and means creditors can not contact you if it is taken. Your unpaid debits will be written off.
Bankruptcy stays on your credit history for 6 or 7 years and you will have to disclose to all possible creditors that you have been declared bankrupt in the past.
It is essential to understand that assets you own such as your house, car or valuable belongings are very likely to be sold to help pay for the debt you owe.
The period that bankruptcy lasts is 1 year. During this time you will be restricted in many areas of your life. It is usually a very stressful time and you are unable to be as financially independent as the average person. You have many financial restrictions but, it is considered to be much less stressful that uncontrollable debt.
How do I apply to become bankrupt?
An individual applies for bankruptcy by sending a statement to the High Court in Northern Ireland, the Insolvency Service in Wales and England.
For sequestration an individual would apply to the Accountant in Bankruptcy in Scotland.
Frequently Asked Questions About Bankruptcy
- Which debts are included in bankruptcy?
- Credit and Store Cards
- Utility arrears
2. What are the greatest risks associated with bankruptcy?
- Your home or car can be sold off to pay for the debt. Any asset which may help repay the debt can be sold off.
- You will be unable to act in certain positions within companies thus, this will affect your job and work life.
- You will struggle to receive credit and will have bankruptcy visible on your credit for 6 years.
Sequestration is a form of insolvency in Scotland. Similarly, your assets such as your home or car can be sold off to pay back the debt you owe. It should only really be considered as a final option, if you are unable to pay back the debt in the time allotted.
Conditions for sequestration
Prior to sending an application for sequestration to the Accountant in Bankruptcy in Scotland you must:
- Owe a total greater than £3000.
- Currently live in Scotland or have done so in the past year.
- You must not have been bankrupt in past 5 years.
There are different risks and benefits associated with sequestration than there is with bankruptcy. Here are some of them:
- You will become free of debt in a short period of time.
- Creditors will no longer be aloud to contact you.
- Your unsecured debts are all written off most of the time.
- Your assets, e.g. your home or car can be sold off to pay debt.
- Credit will be hard to obtain for many years.
- Your ability to work own certain positions will be restricted.
Attention Trust Charity
We hope this helped you understand the implications of bankruptcy.
Need more clarification on whether bankruptcy or sequestration is for you? then call 0112 496 0919 or email firstname.lastname@example.org