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, though there are some exceptions e.g. student debt.
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. Bankruptcies are no longer advertised in the local press unless it is in the public’s best interests. 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, you will be able to retain the property provided 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 purchases 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, it should not be worth more than £1,000 and either required for work (or seeking work) or to perform your duties as a Carer. 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. Read our section on “Will I lose my car?”. Common household goods are safeguarded during the bankruptcy process and nobody comes to the premises. Read our section on “Will bailiffs take my property?”
Once declared officially bankrupt, an individual’s creditors are duty bound to cease all actions as the matter is now in the hands of the Official Receiver. 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 the lifestyle so that the bankrupt person does not return to the same situation.
‘What are the advantages of going bankrupt’ is just one of hundreds of questions we’ve answered over the years, but feel free to call us on 01425 600129 if you need to know more or specifically need bankruptcy help.