What are the Advantages of Personal Bankruptcy?
Often seen as the fastest way to become debt free.
The immediate advantage of personal bankruptcy is that it provides you with an opportunity for a fresh start.
At the time of bankruptcy you no longer have any personal unsecured debts. The future is then yours to do what you want with. There are a few exceptions such as court fines, student loans child maintenance payments.
Even for those people who are asset rich, but who have liabilities personal bankruptcy can be the fastest way out of debt. You will need to be fully aware of the consequences of your actions if your circumstances are particularly complex, but we are happy to assist in getting to the bottom of the issue and providing options.
We often come across people who have submitted their own personal bankruptcy petition, then call us when they have a problem! The fact of the matter is that unless you know what you are doing, it really is in your best interests to seek professional advice.
- You no longer have to attend court as everything is submitted online. In fact, it is unlikely that you will speak with anybody face to face.
- All of your debt is instantly written off as opposed to other debt solutions which tend to keep creditors at arm’s length without actually getting rid of the debt.
- Bankruptcy lasts for a maximum period of 12 months after which time you are discharged. This compares favourably with Debt Management Programmes, where the principal debt is rarely ever paid off and Individual Voluntary Arrangements (IVAs), where you are committed for 5 – 7 years.
- You keep household possessions and personal effects
- You keep the tools of your trade
- Properties in negative (or even level) equity are no longer lost in bankruptcy which allows people to avoid the disruption of having to go into rented accommodation.
- On the other hand, those who choose to give up their properties are not liable for any shortfall once the property is repossessed and sold
- You can generally keep vehicles up to the value of £1000 provided these are required for work purposes. Higher valued vehicles may also be retained subject to negotiation and a probable (small) cash payment to the Official Receiver.
- There are no issues around obtaining a bank account.
- Your name no longer appears in local newspapers.
- Once you have entered into bankruptcy, Bailiffs are no longer able to collect monies on outstanding debts.
Confused? Ask our Personal Bankruptcy experts for advice
Alternate debt solutions like IVAs & Debt Management plans tend to drag for years. Without being negative towards Debt Management and Individual Voluntary arrangements there are some critical facts that need to be mentioned.
Fact: A high percentage of those who are currently in Debt Management Plans are in them because they applied for a loan and were refused, and were then channelled into a debt management plan. In addition, over the last 10 years or so IVA companies have also bought debt management companies because people who are refused an IVA could enter a debt management plan. They would then build up a repayment profile in order that they be entered into an IVA. These organisations started in the North of England which is where the majority of the debt houses are located. An IVA is a process which is sanctioned by the court and anyone who enters an IVA is on the Insolvency Register.
However, there is no national data base or public register for Debt Management plans. Debt management plans have become increasingly popular with those who have assets but do not wish to enter a formalised repayment plan. Debt Management plans are very flexible. The problems with DMPs have arisen from unscrupulous providers who have not managed the client files properly and the client ends up in a worse predicament than was originally the case. There are some really good Debt Management providers who are government backed (CCCS and Pay Plan) who do not charge a fee for their services. Bankruptcy, on the other hand, completely removes the pressure of having to negotiate with your creditors.
Personal Bankruptcy: Let us explain how it can help you
One of the plus points with Personal Bankruptcy is that it removes the problem of having to deal with Bailiffs and debt collection companies. The moment you receive your bankruptcy order, you are not only protected but are essentially debt free. The process involves having a telephone interview with the Official Receiver who will administer the bankruptcy. For the duration of the bankruptcy you should look at or consider the Official Receiver as your financial guardian.
Personal Bankruptcy allows you to make a fresh start. The moment the bankruptcy order is made, you will achieve relief from pressing creditors. Dependent on your circumstances, you will be automatically discharged from bankruptcy anywhere between 6 and 12 months.
The majority of assets that people believe they will lose in bankruptcy, they can actually keep in most cases, i.e. low value cars, household goods, etc. For expert advice concerning personal bankruptcy please call us for a chat on 01425 600129.