Going Bankrupt? What Are the Alternatives?
In the last quarter of 2008 approximately 19,100 individuals were made bankrupt in the UK making 67,428 for the full year.
In total 106,544 people were declared insolvent.
It is anticipated that this figure could rise substantially during 2009 as a result of the continuing economic recession and increasing unemployment..
Going bankrupt is not such a stigma as it used to be, though there may be better alternatives.
In this article we will examine the process of going bankrupt, when it might be appropriate, and what the alternatives are.
The advantage of going bankrupt is that all your unsecured debts will be written off after a period of approximately one year.
On the other hand the disadvantages are substantial.
To list just a few, it will be very difficult to open a bank account, your credit record will be seriously impaired and you will almost certainly not be able to get credit for many years, you are likely to lose your home if it has any residual value after paying off the mortgage, and you will not be able to become a company director.
To go bankrupt is simple.
The minimum cost is £310 plus a court fee of £140 which could be waived.
You must have this money in cash or cash equivalent.
You also need to fill in two forms, Insolvency Rule form 6.
27 and Insolvency Rule form 6.
28.
The forms can be obtained from the government insolvency website.
You then take the forms and your fee to your local county court.
There is often no need to go bankrupt even if you are in substantial debt.
At the very least you should consider an Individual Voluntary Arrangement.
An IVA is a legal agreement you make with your creditors to pay back a proportion of your debt at an affordable rate of payment.
There is a limited time period during which you make these repayments, typically 5 years.
After that time any outstanding debt is written off.
An IVA is only possible if your creditors who have at least 75% of your debt agree.
The IVA process must be carried out by a licensed Insolvency Practitioner.
An advantage of and IVA over bankruptcy is that you will be able to keep your house.
There may be less severe options available to you than either of the above.
If you are in serious debt you should certainly contact a debt counselor without delay.
In total 106,544 people were declared insolvent.
It is anticipated that this figure could rise substantially during 2009 as a result of the continuing economic recession and increasing unemployment..
Going bankrupt is not such a stigma as it used to be, though there may be better alternatives.
In this article we will examine the process of going bankrupt, when it might be appropriate, and what the alternatives are.
The advantage of going bankrupt is that all your unsecured debts will be written off after a period of approximately one year.
On the other hand the disadvantages are substantial.
To list just a few, it will be very difficult to open a bank account, your credit record will be seriously impaired and you will almost certainly not be able to get credit for many years, you are likely to lose your home if it has any residual value after paying off the mortgage, and you will not be able to become a company director.
To go bankrupt is simple.
The minimum cost is £310 plus a court fee of £140 which could be waived.
You must have this money in cash or cash equivalent.
You also need to fill in two forms, Insolvency Rule form 6.
27 and Insolvency Rule form 6.
28.
The forms can be obtained from the government insolvency website.
You then take the forms and your fee to your local county court.
There is often no need to go bankrupt even if you are in substantial debt.
At the very least you should consider an Individual Voluntary Arrangement.
An IVA is a legal agreement you make with your creditors to pay back a proportion of your debt at an affordable rate of payment.
There is a limited time period during which you make these repayments, typically 5 years.
After that time any outstanding debt is written off.
An IVA is only possible if your creditors who have at least 75% of your debt agree.
The IVA process must be carried out by a licensed Insolvency Practitioner.
An advantage of and IVA over bankruptcy is that you will be able to keep your house.
There may be less severe options available to you than either of the above.
If you are in serious debt you should certainly contact a debt counselor without delay.
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