Advantages and Disadvantages

Advantages

Once your bankruptcy has been served, you have a clean slate from your creditors. Being discharged from your bankruptcy can serve as a huge relief as you have the mental relief to begin to rebuild your life. Although most debts are written off once the bankruptcy has been discharged, monthly payments to the Income Payments Agreement may need to be made for up to three years (four years in Scotland) following the bankruptcy. You won't have to pay this if your only income is from benefits, as such there are still some restrictions placed on your lifestyle even once the bankruptcy has been served. 

 

Disadvantages

Going bankrupt can be brutal – your whole financial state will be spread out before you. Whilst necessary, this can be daunting. The receiver will go through any assets to see what can be sold to pay off debts. They will generally not bother taking things of minimal value but mainly look for items such as computers, vehicles etc.

Essentially you should consider:

1. Losing any assets of value;
2. If you own a home, it will likely be sold unless there is negative equity;
3. If you own a business, it could be sold, and your employees fired;
4. If you have rent arrears, you could be asked to leave by your landlord;
5. You must declare yourself bankrupt when applying for credit of more than £500;
6. All your financial affairs will be examined in detail, with the possibility of you facing criminal charges if any irregularities are discovered;
7. You will be unable to hold certain public office positions and practice various professions, including that as a solicitor and accountant. You cannot be a company director, nor can you trade under a name other than your own;
8. Your assets may still be administrated by the Trustee or Official Receiver even after you have been discharged. If your income is high enough, you will be asked to pay your debts for three years;
9. Going bankrupt can affect your immigration status;
10. The public and future employers can search for your bankruptcy online;
11. If you inherit money or receive a compensation payment, these funds could be put towards the debt;
12. If your pension fund is higher than your debt, you may not be allowed to go bankrupt; and
13. Your bank account will typically be frozen.

 

Most jobs are not affected at all if you go bankrupt. However, if you work in the following industries, you should check whether bankruptcy will have any effect on your job:

• Armed forces;
• Police force; 
• Security;
• Financial services (banking, accountancy, stockbroker);
• Law, for example, a solicitor or legal executive;
• Medical (GP or dentist); or
• Property (estate or letting agent).

 

How we can help

Lestons can intervene and discuss options with you to resolve the matter, we can, if instructed appoint one of our excellent third-party independent financial advisors who can look at the market for you to try and get you a loan. Please note we make no commission from these referrals but do need clients to open a case so that we can prepare a financial brief for them. To gain our assistance you need to open a case, this is done by simply clicking on the link at the top of the page, you will then need to deposit a sum equal to one hour’s usage, upon receipt of these funds you will be assigned your personal caseworker who will telephone you to discuss the matter and make suggestions on how to proceed.

 

Please note your caseworker can only give generic advice, their role is to prepare your details for handling by our appointed financial advisor and to act as your point of contact, they will also issue you with your Password and PIN, these will be needed to log onto your client dashboard. From your dashboard you will be able to manage and view every aspect of your case, upload documents, images, files etc.