Disadvantages of Bankruptcy
- See also:
- Bankruptcy Overview
- Bankruptcy FAQs
- Disadvantages of Bankruptcy
- How to File for Bankruptcy
- How to Avoid Bankruptcy
- The Effects of Bankruptcy
- UK Bankruptcy Law
- Alternatives to Bankruptcy
The decision to file for bankruptcy should be taken very seriously. This is because of the numerous and significant disadvantages associated with going bankrupt.
In this section we have outlined the main disadvantages of bankruptcy to help you decide if it really is the best debt solution for you.
If you are considering bankruptcy and would like to speak to an adviser about what is involved and other possible debt solutions please contact us by completing the contact form below:
Click Here: For Free Bankruptcy and Debt Advice
This bankruptcy advice service is free of charge and impartial.
The Disadvantages of Bankruptcy
- There is a social stigma associated with bankruptcy. This is intensified because all bankruptcies are advertised in the local papers and in the London Gazette to make them as public as possible.
- If you are declared bankrupt and you own a business then it will be closed as soon as the Bankruptcy Order has been made and your employees will be dismissed.
- You have to hand over any valuable assets (including your home) to the trustee.
- If you become bankrupt then your bank and building society accounts will be closed and your credit cards will be taken away.
- If you are in the process of leasing or buying a product on hire purchase it will be taken away from you and returned to the original owner.
- You will lose you professional and business status.
- Your employment prospects will be prejudiced.
- You will not be allowed to hold certain public offices.
- If you are made bankrupt then you will not be allowed to try and obtain credit for £500 or above without disclosing your bankruptcy history.
- You are only allowed to conduct business in the name in which you were made bankrupt.
- You cannot be involved in forming, managing or promoting a company without the permission of the court.
For many people, the worst disadvantage of bankruptcy is the stigma of having to declare themselves as bankrupt when carrying out certain transactions and the publicity involved.
Bankruptcy has many significant disadvantages associated with it and should therefore be avoided if at all possible.
If you can afford to collect together as little as £250 a month you may be able to qualify for an IVA instead of having to resort to bankruptcy.
The IVA (Individual Voluntary Arrangement) was introduced by the Insolvency Act of 1986 as an alternative to bankruptcy.
With an IVA your creditors agree to write off a proportion of your debt (often as much as 70%) in return for regular monthly payments over an extended period of time. These repayments are based on what you can afford to pay and can be as low as £250 a month.
Unlike with bankruptcy, if you set up an IVA:
- There is no social stigma as an IVA is confidential
- You will not face professional disqualification
- You can still hold public office
- You can keep your assets
- You will find that the costs are much lower than for bankruptcy
Our specially trained debt advisers can discuss IVAs and other alternatives to bankruptcy with you, free of charge. Simply complete the contact form below:
Click Here: For IVA Advice and Other Bankruptcy Alternatives
To contact an advisor call 0800 138 5445. Alternatively complete an online enquiry form and an advisor will call you back at the time that you specify.