If you have severe financial difficulties, the most extreme option available to you may be bankruptcy. Before considering this as an option you need to be fully aware of what this option is and the consequences of becoming bankrupt.
Bankruptcy is considered to be one of the most extreme debt solutions and only an option if you have severe financial difficulties and cannot pay off the excessive amount of debt that you are burdened with. Before applying to be bankrupt and going down this road you must be made aware of how it works and what the outcomes are.
While there are certain advantages to becoming bankrupt – such as being free from debt with your assets shared fairly amongst your creditors – it should not be seen as the first and only solution. You will be required to give up valuable possessions, possibly even your home and your business – should you run one – along with all its employees.
How The Bankruptcy Process Works
Following a bankruptcy petition which is placed by either yourself or your creditors, a court has to make a bankruptcy order. This begins the process, from which point – whether you agree with it or not – you must engage with it fully. If your creditors presented the petition then the issue can still be resolved before the court gets involved; once it reaches the court however it is much more difficult, costly and time-consuming to stop the process.
Prior to all this, once you have provided Simple Financial Solutions with all the information we need, we should be able to have your petition ready within a few days. Once the bankruptcy order has been made the Official Receiver will give order of the notice in the London Gazette and other publications if necessary. Next, a court hearing date will be set involving just you and the bankruptcy clerk who will take you through the papers you need to sign and make you take an oath that all the information contained within the papers is correct to the best of your knowledge. These papers are then sent to the judge who will declare you bankrupt.
What Happens After You’re Declared Bankrupt?
The Official Receiver will ask you about any assets and bank accounts that you may have. They then have to give notice of your bankruptcy to a range of organisations including local authorities, courts, sheriffs, bailiffs, HM Revenue and Customs, utility suppliers, the Land Registry, banks, building societies, mortgage companies, pension companies and insurers to further investigate the full extent of your assets and liabilities.
Once you are declared bankrupt you will have a number of responsibilities. You must comply fully with any requests made by your Official Receiver, whatever they may be. You must also inform your Receiver of any changes to your financial circumstances whilst you are a bankrupt (e.g. inheriting money or property, or receiving a payment from a claim). You won’t be able to secure more than £500 credit without declaring you are a bankrupt nor can you make direct payments to your creditors. You must steer clear from using your bank account(s) from the outset – we can advise on choosing a new account though.
Looking ahead though, there is light at the end of the tunnel; after a maximum of 12 months, or even less in some cases, you will be free from bankruptcy.