Bankruptcy is often seen as the fastest and simplest way out of an unmanageable debt situation
Once an individual declares personal bankruptcy the majority of their debts are written off. There are some exceptions to this. Read our section on “What debts are written off” to make sure this is the case for you.
Bankruptcy is not as stigmatised as it used to be. In most instances bankrupt persons are not advertised in the local press any more unless it is a public interest case. To find out what happens to your information, read our section on publicity.
Property: If your home is in negative equity and you are considering bankruptcy, it is likely that you will be able to remain in the mortgaged property as long as you maintain mortgage and secured loan payments. You will need to confirm with the official receiver that you want to obtain the beneficial interest in the property. There is a simple and straightforward process involved with this and it is standard practice among Official Receivers. If you have significant equity in your home and you enter bankruptcy, your property might be at risk. However, the process is slow (it usually takes 12 months) and a number of options will be presented before the actual repossession procedure commences. Among these might be an agreement whereby a 3rd party purchase your share of the equity in the property. This is very common with properties that are jointly owned. Read our section titled “Will I lose my home?”.
Vehicles: In order to retain a vehicle in bankruptcy, you must be able to demonstrate that is a necessity. Usually, the vehicle would not have a value of more than £2000. In situations where a vehicle is owned and its value is significantly more than this figure, it could be sold and replaced with a cheaper vehicle. The same applies with commercial vehicles, especially if that vehicle is used as a tool of your trade. Read our section on “Will I lose my car?”.
The most common household goods in your home are safeguarded during the bankruptcy process. Read our section on “Will bailiffs take my property?” It is luxury items and valuable electronic equipment that could be taken and sold. The rule of thumb is to have what you need and no more.
Once declared officially bankrupt, an individual’s creditors must and are duty bound, to cease all actions as the debts are now expunged. This often comes as a tremendous relief to the majority of people as they begin to take control of their lives again. The main objective should always be to start again and adjust lifestyles so that the bankrupt person does not return to the same situation, with unmanageable debts, again.
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