To help you decide the best course of action for you, we have compiled a list of your Frequently Asked Questions (FAQs) about bankruptcy.
What is Bankruptcy?
Bankruptcy is an option that you can consider if you feel that you are unable to pay off your debts. It is a formal procedure that involves applying to a court and using your assets (your house, your car, your savings, etc.) to pay off your creditors.
The bankruptcy can also be started by another party or person if you owe them more than £750.
What Is Bankruptcy Involve?
Bankruptcy involves you appointing a third party to sell your assets. The third party will then distribute the money receive from the sale to the people you own money.
How Do You Qualify For Bankruptcy?
Anyone who can make themselves bankrupt. However, only a court can declare you bankrupt, and you are formally bankrupt when a court issues a bankruptcy order against you.
What Assets Will Be Sold?
Your bankruptcy trustee will look to liquidate your assets in order to recover as much money as possible. The types of assets that the trustee will sell are:
- Property – even if it is jointly owned
- Tangible assets such as cars, vehicles, jewellery, etc.
- Investments such as shares, bonds, savings, etc.
- Any money that you hold in a bank or building society account
- Lump sums that might come from pensions or other forms expert
You are entitled, however, to retain equipment that might be considered essential for your on-going employment such as a vehicle, books, tools, etc. You are also entitled to retain possession of equipment that might be needed to enable you to live and function at a reasonable level such as clothes, furniture, etc.
How Does Bankruptcy Affect Future Payments?
You may have to relinquish some of your future weekly or monthly salary. The bankruptcy trustee may also make a claim on your acquisition of future assets such as inheritance, lottery wins, etc.
How Long Does Bankruptcy Last?
Bankruptcy usually lasts 12 months. After this period has ended, you will be discharged from your bankruptcy debts and the people to whom you owe money cannot make any claims against you to recover their monies.
Does Bankruptcy Affect Your Credit Rating?
Bankruptcy is a formal legal procedure that is used as a last resort in many cases to recover money from an individual who has not been able to repay their debts. Your credit history will show the bankruptcy and this is likely to have a detrimental effect on your credit rating. This means that, in the future, potential lenders may be reluctant to provide you with credit.
Alternatives To Bankruptcy
There are alternatives to bankruptcy that you may wish to consider if you are struggling to pay off your debts. These include:
If you are in any doubt about the right course of action, you should speak to a qualified debt management professional who will be able to advise you.