If you are unable to repay your debts then declaring bankruptcy may be the most suitable solution for you. Based on my personal experience and knowledge I have written this page as an introduction.
Bankruptcy will write off the majority, if not all, of your debts. There are certain debts, such as some student loans, that cannot be written off. This allows you to wipe the slate clean with your creditors and prevent them from ever chasing you for the money that you owe. That is the main benefit.
Unfortunately, as with all debt solutions, declaring bankruptcy is no easy option. It is consequential in nature but providing you understand the consequences it can be an effective solution. Remember your house, income and other assets may be affected.
There are often a set of circumstances when bankruptcy may be more strongly considered. This is often where:
To establish if it is your best option you should speak to an adviser and compare all the solutions.
It's referred to as personal bankruptcy for two very good reasons:
Each person will handle the effects of bankruptcy differently, however there are some common emotions felt. Typically people will feel a degree of uncertainty during the year of the bankruptcy, often wondering what is going to happen next. This can build on the stress that exists from the situation. Pressure is often felt as there may be a family that has expectations of relief as well as a need to be informed.
Due to its seriousness help should be sought from someone with a specialist knowledge of the subject. Obtaining help will not only prepare you for declaring bankruptcy but it will remove the uncertainty and provide some much needed support during the process.
It is important to understand that you are proceeding with a legal process. Some of the consequences can be serious so it is important to be aware of them before going to court. In particular people usually want to know what will happen to their house and their income.
You would usually consider other solutions if you have significant assets that you do not want to lose or you have enough of an income to repay your debts within a reasonable time period. There is no hard and fast rule. It is a case of weighing up each solution and choosing the one that is most suitable for you.
Although each experience is different I took steps to detail my journey. I wrote this as a blog before I wrote this website – my bankruptcy experience.
Whilst declaring yourself bankrupt is as easy as a trip to court the actual process can become complicated, which will usually occur when:
If you prepared for your bankruptcy by getting advice then hopefully you would have already addressed the complication. If you did not then it may come as a surprise to you. This is when bankruptcy gets personal as your family and friends can be affected.
Examples of these complications are:
A number of complications can arise and it is important that you know what they are in advance. That way there should be no surprises for you and your family.