People accumulate debt in various ways such as business, gambling, shopping, health problems, job loss, redundancy and relationship breakdowns amongst others. I built up almost £33,000 of debt through loans and credit cards as a student and a whopping £450,000 plus through a business I started not long after university, all coming to an end at the age of 27 when I declared myself bankrupt.
Bankruptcy suddenly became a realisation for me when my business went from good to bad:
After discussing the possibility of starting an insurance brokerage with two colleagues we decided to go for it. At their flat and with no capital behind us we started telemarketing using the BT phone book. From there we grew the business to employ 20 staff and a turnover of about half a million pounds per year. It was great – we were becoming a prominent player in the online market and had several major life insurance companies showing interest.
Then it went downhill very quickly. Unprecedented changes in the industry very quickly impacted a small company such as ours. The debt began to build and every little problem seemed to have financial consequence. The company became insolvent and appointing an insolvency practitioner was the responsible action to take. Unfortunately the other two directors disagreed and were happy to continue trading so I resigned.
Unemployed with £33,000 of personal debt I could barely manage and a potential £450,000 plus of debt that depended on the success of the company called for a careful review of my personal finances. I had little faith in the leadership of the company to direct it out of insolvency, which in essence meant the £450,000 was a harsh reality!
Before making the decision to petition for bankruptcy I knew there were several lifestyle factors to consider first:
- My personal objectives for the forthcoming years and how bankruptcy would impact. What are the long term effects? What would be the affect on Miss Piggy?
- My short term financial position as any proposal to creditors to aviod bankruptcy would have to be acceptable. Was a bankruptcy alternative a consideration?
- Having worked in financial services for the last 4 years threw a spanner in the works as personal bankruptcy would have serious consequences for my career. Would I still be able to work in financial services?
- What about the stigma of bankruptcy?
Luckily I didn’t have a house or any other valuable assets to complicate the decision further.
Since petitioning for bankruptcy I have come to realise that the hardest part is weighing up the alternatives and Deciding on Bankruptcy.