What is Bankruptcy?
Bankruptcy is a court order that you can apply for if you are in serious debt. It is a legal declaration that confirms you are unable to repay your unsecured debts and any assets you have will be used to pay off your creditors. Any debts left unsettled will be written off completely. Whilst it is a possible solution to a serious debt problem, bankruptcy is not a decision to be taken lightly, as it can have a severe impact on your credit rating and future life.
You could benefit from:
- Your unsecured debt being wiped off at the end of your bankruptcy period.
- A stop to legal action from creditors.
- Creditors will be prevented from chasing you for your arrears.
- Legally frozen interest and charges.
- Your bills and living expenses will be taken into account during the application process.
Things to consider
- If you are made bankrupt you have to follow certain 'restrictions', including the prevention of borrowing more than £500 without telling the lender. It is a criminal offence if you break these restrictions.
- You may have to sell you home and some of your possessions during the bankruptcy process.
- Bankruptcy will stay on your credit file for 6 years from the time it started. This means after you are 'discharged' the bankruptcy record will still be on your file. After 6 years it will be deleted from your report.
- The bankruptcy process will incur costs that you will need to pay.
- Bankruptcy will be recorded and entered on to a public register.