Bankruptcy Pros & Cons
If Bankruptcy seems like your only option out of debt, it is very important that you understand the Pros & Cons of a bankruptcy order.
IVAs would always recommend that you seek out other alternatives first, these include IVAs or Debt Management Plans. For free ethical advice, please call our expert advisors on 0808 131 9103.
Pros of Bankruptcy:
- All your debts are written off within 12 months.
(Although you may have to make further payments if you are subject to an Income Payments Order.) - You will not be liable for the debt.
- No more creditors’ phone calls and letters.
Cons of Bankruptcy:
- Any of your assets can be sold, including your home or car.
- Disposable income will automatically be paid to your creditors.
- Certain debts cannot be written off, such as fines, child support, student loans and fraud.
- It will remain on your credit file for 6 years.
- The Order will be advertised in your local newspaper.
- If you apply for more than £500 in credit, you must inform the lender that you have been declared bankrupt in the past.
- You cannot trade in a business under any other name, unless you inform persons of your bankrupt status.
- You cannot become a member of parliament, justice of the peace, school governor or member of a local austerity. Some professions also exclude bankrupts.
In terms of solving debts, bankruptcy is an extreme solution, and is only suitable for debtors when all other options are exhausted. Always take expert advice from an Insolvency Practitioner.
Entering into an IVA may adversely affect your
credit rating for up to six years from the date of approval.
Your property will be protected within an
IVA but you may be required to release all or part of any equity during the
period of the arrangement.
Failure to complete the term of an IVA can
result in bankruptcy.
(In Scotland, a PTD is the equivalent to an IVA.)