The beginning of the end?
Bankruptcy is something nobody wants to be associated with. It has a certain stigma attached to it, and for many, conjures up images of burly bailiffs banging down their doors to take away all their prized possessions. And then what happens? Your children move in with a more financially secure relative, whilst you live a short, cold and very sad life. You may end up swigging cheap sherry in a public park, becoming a source of mockery and amusement for the local teenagers perhaps?
Avoid the emu effect
OK, so that may sound a little extreme, and thankfully it is highly unlikely you or your family will end up in this position. There are lots of viable options for those facing the dreaded ‘B’ word these days, and since the recession it has become more common place, meaning seeking advice has never been easier. The worst thing anyone can do when facing financial woes is to bury their head in the sand and ignore debtors, as this will only make your problems worse.
Non-homeowners
77% of those declaring bankruptcy are non-homeowners, making the whole process less complicated with no family home to fight over. You can have all your debts written off and be free of them within a year, however do bear in mind this will have an impact on future lending and even job prospects. Some lenders like to see five years of good account conduct (some even longer) after bankruptcy before they will consider offering you credit. Your employment options may also suffer, and a career in banking or indeed, many other financial based organisations are likely to be unavailable to you for some time.
Homeowners
Although only 23% of bankrupts own their own home, a recent survey suggested homeowners spend a massive 97% of their monthly income, leaving little in the way of help when it comes to unexpected bills. Losing your family home is an incredibly daunting prospect, but there are certain circumstances where you can delay or even stop the sale of your property. This is a possibility where the value of your beneficial interest is less than £1,000, or the legal title (or beneficial interest) can be transferred to someone else. The sale of your home can also be delayed for up to a year if you need to organise somewhere for your children or a partner to live.
Light at the end of the tunnel
Whilst going through bankruptcy, if the money raised from the sale of your assets does not cover your debts, you may be able to make monthly payments. The amount will depend on how much you can afford after essentials such as food and bills are paid, so you may want to switch from M&S to Aldi if you want to make a more significant dent in your debts. In most cases, you will be discharged after 12 months, although this can be longer if you break the bankruptcy restrictions or do not co-operate with your trustee.