How credit rating is affect when living abroad?

I have been living abroad but have large debts in the UK. How will this affect my credit rating in the UK and should I file for Bankruptcy?

Whether you live abroad or in UK, any debts that you possess stay in the credit reference file for about six years from the last activity that has been made on your account which can include repayments also. This does affect your credit rating and applying to bankruptcy will help write-off your debts. Bankruptcy also possesses straining effects and can affect your credit ratings though it improves after a period of six-years. But before you apply for bankruptcy, it is a must that you know the complete details of bankruptcy and how to apply.

Bankruptcy in UK
It is a procedure where you declare legally your inability to pay off debts. The debts are written off and the status of bankruptcy normally lasts for about a year. All of your assets and accounts are seized by the court towards debt repayment.

How to become bankrupt in UK?
To file bankruptcy in UK, you need to file in your petition and other documents along with the court fees to initiate your bankruptcy. Once your petition is approved, the court issues a bankruptcy order which marks the date of your bankruptcy initiation.

Can you apply for bankruptcy in UK when you are living abroad?
Yes, you can apply for bankruptcy in UK, though you are living abroad. But you might need to file it in person in English or Welsh county court and can be done only for the first three years of abroad residence.

What happens when you file a bankruptcy in UK?
The court looks into your petition and issues a bankruptcy order stating the start of your bankruptcy period. The court also appoints an official receiver to analyse your assets and to take over your financial debts. In case you have a considerable amount of assets, an insolvency practitioner is recruited as trustee to work on the management and sale of properties. The official receiver can also acts as a trustee if there are not enough assets to manage around.

How does bankruptcy affect your assets?
Once declared bankrupt, all your assets are seized and your accounts frozen by the court. The official receiver takes charge of your complete property and assets to pay your debts to the creditors. The trustee will consider your share of any asset you possess as a potential source for debt repayment though there are exceptions. You can stay in your household home with your family for a period of one year which provides you sufficient time to look for an alternative staying arrangement. The court also allows you to retain your work equipments and a vehicle for commuting to work.

Is credit history affected by Bankruptcy?
Bankruptcy affects your credit history and can have disturbing effects on you future borrowing capacity. The process tends to pull down your credit rating for about six years after which timely and regular payments can help improve it.

How long does bankruptcy normally last in UK?
Bankruptcy normally lasts for a period of 12 months from the date of issue of bankruptcy order by the court. The co-operation that you provide to the official receiver makes a huge difference in speeding up the term of bankruptcy. It is expected from you to provide all details of assets and other properties in a genuine manner. Any sort of irresponsible behaviour or non co-operation with the official receiver can increase the term. Based on his analysis, the trustee can also recommend the court for issue of a bankruptcy restrictions order which may last anytime between two to fifteen years depending on the charges.

What are the alternatives in UK that can be opted instead of bankruptcy?
Bankruptcy as we saw is a serious issue and at times heavy debts can be a temporary issue and declaring bankruptcy need not be the solution. Bankruptcy can cause you to lose your assets, properties and sometimes even your pension funds. There are few other solutions that can help you handle your debts in an easier way than declaring bankruptcy.
1. Informal agreements – This is the first step you can take in cases of heavy debts where you can write to your creditors about your financial situation and request for an extension of timelines or for a reduction of amount.
2. IVA – This is similar to the previous option but with the clause that an insolvency practitioner helps you to handle the arrangements with your creditors.
3. Administrative Orders –You can also alternative chose to pay the court on a monthly or a lump basis, which it would distribute among your creditors.

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