Bankruptcy – Pros and Cons
Disadvantages of bankruptcy:
Any equity in your house belongs to the Official Receiver, not you. If you can’t afford to buy the Official Receiver out, he can force the repossession and sale of your property. You may lose your house.
You can’t act as director of a Limited Company and a bankruptcy may impact on your job if you handle cash.
You may well lose your bank account (and the bank will find out).
You cannot take more than £500 credit (although I accept that may be the last thing you want to do!).
Bankruptcy is a Court process. You will have an interview with Official Receiver and maybe also with a Trustee in Bankruptcy.
Your bankruptcy will be advertised and may appear in your local paper.
If you can afford to make payments to the Official Receiver you will be expected to agree to do so. If the Official Receiver thinks you can afford to make payments and you refuse to agree, he can obtain a Court Order to make you. He can make your employer deduct the monies from your pay.
The Official Receiver has considerable power – if you do not cooperate he can obtain a warrant for your arrest or public examination in front of a Judge.
But there are some advantages:
Bankruptcy provides a clean break and draws a line under past problems.
Pensions are generally protected and will not be lost in a bankrupcty.
Most (but not all debts) cease with the bankruptcy ...fines, student loans, family court orders for maintenance or CSA will still have to be paid.
Bankrupts are given an automatic discharge after a year and may be discharged earlier, but this will depend on the Official Receiver processing the paperwork.
Although your equity and any other high value assets need to be dealt with you should always remember a deal is there to be done