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Bankruptcy Explained

By: Suzie Harris - Updated: 24 Oct 2012 | comments*Discuss
 
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Bankruptcy is the last resort for people in serious debt. It is usually avoided as it has far reaching consequences. If you are having problems paying your debts then try to use alternative methods before opting for bankruptcy. It still has a huge stigma attached to it and can make it very difficult to regain respect from financial institutions in the future.

If there is a plus side to bankruptcy it is that within a year - sooner in some cases - your debt problems will be sorted and you will have been discharged. You may find that in the near Future you will have problems opening bank accounts or borrowing money as confidence that you will pay money back will have been shattered.

Who Declares Me Bankrupt?

The courts are the ones who will actually draw up your bankruptcy order, but to actually go bankrupt either you or one of you Creditors will make the decision to declare you bankrupt.

Who Controls My Bankruptcy?

Usually it will fall to the official receiver or a court appointed officer to take control and make sure that the order is adhered to. They will assess everything you own, assets, bank balances etc and then decide how much you can afford to pay to the creditors. They are however governed by strict guidelines.

Will They Take Everything?

Basically they will take everything of value but by law they have to leave you with your personal belongings such as clothes, books, a cheap car, things you need to be able to continue to work and household furnishings. Your home, however, will be sold.

Who Knows I am Bankrupt?

It is possible for most of the world to know with today's technology. Bankruptcies are advertised in the national and local press along with certain dedicated websites. Anybody can search the Internet and find a list of bankruptcy listings within seconds. If you are made bankrupt then your name will be there. Unfortunately, if you want to stay quiet about your money problems then bankruptcy is not the option to choose.

This may seem to be a depressing state of affairs, and to be fair, it is. However, if you are finding it more and more difficult to meet your monthly commitments then there may be a time that you could face bankruptcy. Facing your debts before you reach that level of intervention is always advisable. There are a number of viable options that you can look at before finally deciding to opt for bankruptcy, such as:

  1. Informal agreement
  2. Debt Management Plan
  3. Administration Order
  4. IVA
Bankruptcy should always be the last resort. Seek help before you take this step.

If despite all your best efforts you find yourself facing the possibility of bankruptcy, don't panic. Although it may feel like you have failed, you will actually get your debts sorted out once and for all. Once the bankruptcy period is over you will be debt free and able to rebuild your life. You must, however, adhere to the bankruptcy order. Failure to do so will result in serious consequences.

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