Becoming Bankrupt the process and what to do : Financial News Monthly
Becoming Bankrupt – the process and what to do
It has been stated that in recent times bankruptcy cases have massively increased and they are on an upward trend. Sadly it is an option that has to be considered when an individual cannot repay debts. Bankruptcy is a legally declared inability or impairment of ability of an individual or organisation to pay their creditors. Because of this creditors may file a bankruptcy petition against a debtor, which is known as involuntary bankruptcy; creditors can do this when you owe them more than £750. Bankruptcy can also be initiated by the debtor, known as voluntary bankruptcy; again this can be filed by either an individual or organisation.
If you are currently facing the prospect of bankruptcy or if it is something that you feel may be brought up in the near future it is important that you look at all the other possibilities before accepting bankruptcy. You should look at these alternatives as soon as possible. One of the main reasons for this is because of the implications that come with being bankrupt, some of these implications include:
• You no longer have control over your assets
• If you want to obtain credit of over £250 you can only do so with permission from the lender
• You are unable to act as a company director
• You cannot take any part in the promotion, formation or management of a limited company (LTD) without the permission of the court
• You cannot trade in any business under any other name unless you inform all the people who are concerned of your bankruptcy
• You may not practice as a Charted Accountant / Lawyer
• You may not act as a Justice of the peace (JP)
• You may not become an member of parliament
• You may not become a member of the local authority
• Your credit is affected for many years after the annulment
• You may be publicly examined in court
It has been said that the average UK household’s debt to income ratio has risen substantially in recent years, which has led to some people speculating that the rise in insolvencies is linked to excessive borrowing. However, the ratio of debt repayment costs to income has remained quite low, which weakens the claim that borrowing has led to more cases of bankruptcy. Moreover, the rise in borrowing could itself be a reflection of a lower fear of bankruptcy; the destigmatisation effect again.
Although bankruptcy has a bad stigma and is publicly advertised, it should always be considered when dealing with insolvency cases. It should also be noted that you are normally freed from your bankrupt order after a year; however during the time that you are bankrupt you will have to close any bank/building society accounts. It is possible to open one again but to do this you will have to get permission off the bank or building society. Also depending on the type of employment that you are in it may also be affected. This is why it is important that you check your contract of employment to see if bankruptcy is mentioned. You can also ask your staff welfare officer or trade union if you are uncertain. If you belong to a professional body which prohibits bankruptcy you could be struck off, e.g. solicitors or accountants.
For more information it is important that you seek professional help straight away and that you investigate all other options rather than bankruptcy.
Helen is the web master of Edge of Bankruptcy, specialists in all aspects of Bankruptcy and providing you with all the professional advice you will need about all aspects of Bankruptcy.
Becoming Bankrupt – the process and what to do / Author: Helen
