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What is bankruptcy?
What is Bankruptcy? What are the pros and cons? Who's it for ? How much will it cost?
Bankruptcy is one way of dealing with debts you cannot pay.
In brief:
The advantages are that no-one can pursue you after the bankruptcy order is made and its all over in a year.
The disadvantages are you lose all control of your assets including your house (you will be given time to rehouse), your credit rating is affected for many years after, there are many positions you are not legally allowed to hold, the social stigma of bankruptcy (the names of people going bankrupt is published), and a full and formal investigation into your affairs. Withholding information about assets you may have is a criminal offence.
It may well suit someone with little or no assets, young or old, someone unemployed, someone not in business and who doesn't care about the social stigma.
It is unlikely to suit someone who wants to continue trading in business or who works in some of the professions and who wants to keep the house.
To make yourself bankrupt will cost you about £470. If you are made bankrupt by your creditors the costs can be quite considerable.
Other ways of dealing with overwhelming debts are through a debt management plan (DMP) or through an Individual Voluntary Arrangement (IVA).
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