5 Facts About Bankruptcy

If you are having financial problems then you might turn to the last resort, bankruptcy. This is the absolute last resort and you should consider all other options before getting to this point. It is important that you are fully aware of the problems that going bankrupt can cause when you are looking to secure credit in the future, it can affect applying for bank accounts and any form of credit for a minimum of seven years.

1. Bankruptcy means you turn to the courts for help sorting out your financial situation when you have too much debt and you are unsure as to how you will pay it back. It is the very last resort that you should try; you must have tried other options before you reach the point when you are filing for bankruptcy.
2. If you have reached the last option on your list on sorting out your finances and bankruptcy is your only option you will need over £700 to file for bankruptcy. This does sound a little odd seeing as you are unable to pay your bills and you might even have creditors taking you to court because you haven’t paid them, but somehow you have to find over £700 to actually be able to declare bankruptcy.
3. You will lose control of your money, your accounts are frozen and a court appointed person called the Official Receiver takes over the control of your finances. They are looking to see what to use to pay off debts, this could mean your home and some of your possessions get sold. In some profession’s you can actually lose your job too.
4. You will need to go to court and swear an affidavit that you have given the court all the information on the creditors you owe money to, as well as all the details of the money you have. It is then up to the court to decide if they will allow you to proceed with the bankruptcy, they can reject it if they believe there is another way to sort out your financial situation. If you knowingly give false information or forget a bank or building society account, you can face prosecution because it is a criminal offense not to declare everything.
5. Within a year, the bankruptcy is normally complete. However, it will stay on your credit file for a minimum of 6 years and it will affect your ability to get any form of credit during that time. There is an acceptation to this rule, if the court appointed official thinks you were not helpful in resolving the situation or they believed you knowingly took out credit without intending to pay the debt they can issue you with a bankruptcy restrictions order and this prevents you from getting credit for at maximum of 15 years.

Declaring Yourself Bankrupt

If you feel that your debts are out of control and you are thinking that declaring yourself bankrupt is the easy answer, then you need to reconsider the information. It is the last resort in any financial situation and only after you have professional advice should you choose this path. It is possible to talk to professionals in the Citizens Advice Bureau who will be able to guide you as to the course of action you should consider.

It is important that you try other ways first in dealing with your financial disaster. If you don’t deal with how you came into the situation first then you might head straight back down the path of financial ruin. Learning what steps you need to take first is important to understand fully the options that are going to suit your needs.

Therefore, only go down this route if you have spoken to professionals in this area and have exhausted all other forms of a resolution to your financial situation.