Effects of Bankruptcy

The effects of Bankruptcy do not disappear at the end of the bankruptcy order. The stigma and implications attached to the effects of bankruptcy can last for many years to come.

Bankruptcy is not an easy way out of debt and One Advice would advise that you get professional bankruptcy advice before declaring yourself bankrupt so you are fully aware of the risks and the long terms effects of bankruptcy.

Remember, there are a number of alternatives to bankruptcy. Please call Harrington Brooks today for more information about how you could avoid the effects of bankruptcy.

Long Term Effects of Bankruptcy 

During the bankruptcy procedure, anything that you have as an asset may be sold to raise money for your creditors to repay your debts: for example your home and shares. 

Bankruptcy is a public process so details of the order will be published, which may have an adverse affect on your reputation. Details will be published in your local newspaper, are available online and the proceedings are held in open court.

In the short term, bankruptcy means that you will not be in control of your assets as all control if passed over to your Official Receiver. You are only allowed to keep the essential work and home objects, such as tools and furniture. The rest will be claimed by your creditors and then sold, this includes your home.

You will have to inform your Bankruptcy Trustee of any wage increases or extra money that you receive, such as money left to you in a will or a windfall such as a lottery win.

If you ever wish to seek credit of more than £500, then you must declare that you have been bankrupt, and it is an offence not to do so.

You will have a poor credit rating, making it extremely hard to get credit for any purpose. If you want credit over £500 then you must declare that you have been made bankrupt, and it is a criminal offence if you refuse to do so. It will hinder your chances of becoming a homeowner, as it will limit the amount of money that you are able to borrow for a mortgage.

Bankruptcy will limit your employment prospects, as certain careers exclude bankrupts. Examples of these include MP, Armed Forces, Police Services, Estate Agents and Post Office workers. If you run a business then it is usually closed when your Bankruptcy Order has been accepted. Any business assets will be dealt with by your Official Receiver.

Avoiding the Effects of Bankruptcy 

As you can see, there are many long term effects of bankruptcy which cannot be avoided. However there are alternatives which can help.

An IVA (Individual Voluntary Arrangement) was introduced by the Government as part of the Insolvency Act of 1986 as a realistic alternative to avoiding the effects of bankruptcy. It is the only alternative debt solution which can write off your debt. You make repayments based on what you can afford after living expenses have been deducted. The greatest advantage of an IVA is that you can keep your home.

Please call today to see if we can help you to avoid the effects of bankruptcy.

Unsecured debts only. The decision to apply for bankruptcy is serious and should only be considered as the last resort and then only if you are unable to obtain an IVA or an alternative debt solution.