Bankruptcy Law and You

The thinking behind UK bankruptcy law is to allow people who have got into debt through no fault of their own a way of paying off their debts by selling their assets and relieving them of the stress and strain of financial hardship within a designated timeframe.
The Enterprise Act
Bankruptcy is governed primarily by the Enterprise Act of 2002 but amendments were made to it is 2002 and 2004. It is 2004 that marks the most notable changes to this act. These changes had a big impact on UK bankruptcy law for individuals and small businesses alike. This is because the changes have had significant impact on the law surrounding bankruptcy, thus making it easier for people in serious debt to find a solution. However, the flip side of this is that record numbers of people are now filing for bankruptcy then ever before.The most significant change to the law surrounding bankruptcy is that of selling the home of a bankrupt. Until the changes in 2004 the court appointed Trustee has no time limits on when they could sell your home to pay debts. If they waited five or six years there was nothing you could do. Now, however, they have a strict time limit of three years in which to do so. Once this time limit has passed the house becomes the property of the bankrupt person once more and can't be sold -unless you go bankrupt a second time.
For anyone going bankrupt another significant change that is making it the number one choice for people in debt is the duration. Until the reform of the Enterprise act, bankruptcy normally lasted up to three years before being discharged. Now that time limit has been reduced to only one year. This means that to many people searching for a solution to financial hardship bankruptcy is a more attractive solution than the much publicised IVA which has a duration of sixty months. Creditors still prefer to chase you for months with threatening letters and phone calls as they get more of their money back than they do if they choose to register bankrupt. Bankruptcy means you only pay back a small portion of your original debt and the remainder is wiped clean. This is the core reason why many creditors never try to register you bankrupt despite the fact you are not paying them regular payments, for them bankruptcy is not the best option.
Apart from these changes to the law there are the existing requirements that have to be adhered to, such as closing your bank accounts, returning your credit cards and leased goods. You will also have some severe restrictions placed on you regarding starting a business. Your landlord, creditors and family are informed as to your situation, and as mentioned before you will have your details published in the press. However, as more and more people are turning to bankruptcy as a solution the stigma attached to this will lessen over time.
Legal Advice
The law is a very complex thing so to make sure you get the best possible outcome from declaring bankruptcy it is always advisable to consult a solicitor. The first consultation should not cost you anything and because of your financial situation you should be covered my Legal Aid. Another sound reason for seeking legal help when considering bankruptcy as an option is where you live. There are different rules governing different parts of the UK. For instance, there are major differences between England, Scotland and Jersey in this field.
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