Some of the advantages of bankruptcy are:
- Your creditors have no reason to contact you again.
- You can make a fresh start after only one year, maybe less.
- Except certain narrow situations, every penny you owe is written off.
- You have a reasonable amount allowed to you to live on.
- Unless you have luxury items you will be allowed to retain your possessions.
- You can operate a bank account.
- You will be able to start a fresh life with no debt.
- You make no further payments to anybody except maybe a sum agreed with the Official Receiver, or Trustee in Bankruptcy, for a maximum three years.
- You can keep your house if you can pay the Trustee for any equity. If no equity you can have it transferred back to you for a £1.
Some of the disadvantages of bankruptcy are:
- It will cost you money up front to pay the court fees.
- Whilst bankrupt you may not apply for credit of more than £500 without advising the tender you are bankrupt.
- Luxury items may be taken and sold by the Official Receiver, although we have not found anyone who has these items yet.
- Your home may be sold if it has equity and that equity cannot be bought out. You have up to three years to deal with the equity. Today, most houses we come across have little equity or non at all.
- If you are a company director you will have to resign.
- Your credit rating will be damaged.
- Debts under the CSA and Student Loans cannot be expunged.
- You cannot be a director of a limited company.
So you need to consider the two lists. What really affects you and what will you benefit from. If you do not own a house or have any assets and are not a company director, then really you have nothing to lose and everything to gain. As with all important financial decisions, make sure that you take advice prior to committing yourself.