Bankruptcy: The Last Step

It is not uncommon for a working professional to be in some spot of debt trouble. However, there are usually ways to combat this trouble efficiently and without legal process. Creating a debt management plan wherein you deal directly with creditors and lenders to make arrangements to pay your debt quickly is the best way to get yourself out of debt before you dig yourself too far in. For more extreme cases, you may wish to consolidate your debt into a more manageable monthly payment. In even more extreme cases, specifically in those which more than twenty thousand pounds of debt have been accrued, you may want to seek out an Individual Voluntary Arrangement with your lenders. If none of these options will work in your situation, you may need to consider filing for bankruptcy.

Bankruptcy essentially has two aims. The first is to free the indebted from the stress of owing money. The second is to divide the possessions of the indebted among the creditors as fairly as possible. Filing bankruptcy definitely has some negative connotations, and all of the following consequences should be carefully considered before you take this drastic step.

• Your bankruptcy will be announced in the legal section of the newspaper
• Any holdings you have in any business will be removed
• If you run a business, you will have it taken away and all employees will be dismissed
• If you own a home it will be repossessed
• If you acquire any inheritance of monetary or real estate means during the term of your bankruptcy, it will also be taken away
• You cannot hold a public office while bankrupt
• You, in most cases will not be permitted to have any money beyond basic living expenses, and your trustee will closely monitor any bank account activity
• When applying for any type of job or credit you must disclose that your are bankrupt
• Anyone that you do any sort of business with is immediately informed of your bankrupt status
• You may, in some cases, even lose your pension or retirement plans
• There is also a social stigma around being bankrupt that you will have to surmount in order to reestablish yourself.

Luckily, all of the legal stipulations of bankruptcy are lifted once your bankruptcy is lifted. However, the social stigma may take longer to remove. Bankruptcy is a last resort for those in serious debt. If you do file bankruptcy, you are, at the end of your bankruptcy, in a position to start over. Once your bankruptcy is lifted, you are able to hold public office, become a justice of the peace, and own your own business. The bankruptcy will, however stay on your credit score for up to six years.

If at all possible, it is best to make arrangements outside of bankruptcy before pursuing this drastic step. However, if you see bankruptcy as your only option, know that it is not the end of the road. It is a way to start over, and after enough time passes; you can move on and rebuild your good credit toward a brighter future.