Bankruptcy

Are you one of the thousands of people who are in debt and do not know where to turn? Have you lost your job or just have too many bills to pay. Well there is a way out, you can declare yourself insolvent.

First you will need to find a trustful Debt Counselor, you can start with a research of registered Debt Charities or certificated Debt Management Firms. The counselor can help you in finding the best option to your circumstances.

Going bankrupt is a serious matter. Be sure you consider very carefully your financial status, legal implications and cost involved.

One of the options available in the United Kingdom is Bankruptcy.

What is Bankruptsy? How can it help you?

Bankruptsy is a way of getting out of debt. If you cannot pay your Creditors what you owe them, you can file for bankrupt though the Courts. The Bankruptcy Order can either be made by you or a Creditor. Once the petition is filed there are fees that have to be paid to the Courts. You will be assigned a Petitioner who will gather all the information needed such as your assets and income, a list of Creditors and how much you owe each one. You make all of your payments to your Petitioner not to the Creditor.

Once you are bankrupt, all of your assets including your home are controlled by your Petitioner. There are a few things that you are allowed to keep if you file bankrupt such as, tools, vehicles (depending on the value) and books as well as clothing, furniture and household items.

Disadvantages of being bankrupt

  • All your information will go public.
  • Paperwork.
  • Companies closed.
  • Lose assets such as home.
  • Lose assets while under Bankruptcy.
  • Creditors and landlord will be advised of your Bankruptcy.
  • Bank account and Credit Cards will be closed.
  • Being prejudiced against.
  • Your Credit History will be badly affected.

The Bankruptcy usually last for 12 months. Your credit rating will be affected by Bankruptcy; it will stay on your credit record for six years. Which will keep you from being able to obtain a loan or buy a new home.

Before you file for Bankruptcy there are a few things that you need to do:

  1. Get all of your Creditors together and make a list including mortgage, medical bills, Credit Cards, loans, and even utility bills.
  2. Find an attorney that can assist you.
  3. Decide which type of Bankruptcy you want to file either chapter 7 or chapter 13.

Bankruptcy Chapter 7

  • Filing chapter seven is when all assets are frozen and seized.
  • Stays on your credit rating for 10 years.
  • Everything is made public.

Bankruptcy Chapter 13

  • Is when you make payments over several years.
  • Stays on credit rating for 8 years.
  • Take up to five years to repay Creditors.
  • Creditors cannot contact or hassle you.

There are other options instead of filing for bankruptcy. Remember Bankruptcy is a really sever option and must be reviewed by an expert before making your final decisions.

  • Informal or Family Arrangement or Debt Management Plan.
    If you are behind in paying your debt contact your Creditors either in writing or by Phone and let them know what your situation is. They might set it up to where you can make smaller payments or set up other arrangements for you.
    This arrangement is not a legal agreement and can be changed anytime by the Creditor.
  • Administration Order.
    This order can be made against you by your Creditors those you owe money to. With this order you will have to make regular payments until your debts are paid in full. But your total debts must be less than £5,000 and you need an income.
  • Debt Relief Order.
    If your debt totals more than £15,000 you can apply for DRO. This option is for those who do not have a lot of assets and only have £50.00 extra a month. This procedure does not go through the Courts.
    You will contact the Insolvency Service. It works by getting your debts put off for a total of 12 months. Your Creditors cannot contact you for a payment during this 12-month period.
    If your situation has not improved during the 12-month period, all your debts involved will be terminated and you will no longer be responsible for paying them.
  • IVA Individual Voluntary Arrangement
    If your total debt is more than £15,000 and you have a regular income you can apply for an IVA.
    An IVA is a formal agreement between you and your Creditors, where you repay your debt with monthly payments during five-years.

After reviewing other options, make the choice if Bankruptcy is the right decision for you. It would depend on how far in debt you are and the total assets you own.

Highlights:

Bankruptcy is a several option. Before go bankrupt you should explore all of your alternatives options with a professional.

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