The Advantages of Becoming Bankrupt
Believe it or not there are actually some advantages to going bankrupt. Unfortunately, bankruptcy is shrouded in stigma, failure and loss of dignity. For companies it is not looked on as unfavourably as they can fail at any time, but for an individual not part of a company, bankruptcy can be devastating. That said, if bankruptcy is the choice for you then you can achieve quite a few positives from the outcome. The largest one being that you are debt free in a relatively short space of time. However, failure to adhere to a bankruptcy ruling could be disastrous.
If you are thinking of going bankrupt you need to know what help it is going to be in terms of solving your problems and dealing with your debt problems. There is no point taking this option if it doesn't address the problems you have. As we discuss elsewhere on this site, there are things that are Excluded from Bankruptcy, so to start you need to make a list of your debts and creditors. If you debt is secured or student loans then this is not the option for you. If your debts are covered by a bankruptcy ruling then here are the advantages to declaring bankruptcy:
- You can be free you from your debts subject to the restrictions of the bankruptcy order.
- Your assets are divided equally amongst your creditors so that they all receive some money.
- Stress is reduced significantly as you stop receiving threatening letters and phonecalls. Creditors will have to deal with court appointed Official Receiver or Insolvency Practitioner.
- Creditors are happy as they know everything is sorted out and they receive something.
- An investigation is carried out financially to decide what you can afford to pay.
After the term of the bankruptcy, usually a year, you are debt free. Even unhappy Creditors will have to accept that the debt has been written off and they can't chase you for more money. If they do, they are in contempt of court and you can take action against them.
- After discharge you are free to make a fresh start. This time try to avoid the mistakes you made that led to bankruptcy.
- You get to keep personal belongings, a car, your household goods and in some cases even your home.
- You pay back far less of the debt than if you continue to struggle. With other methods of debt management you will have to pay back far more for far longer.
Take all these factors into consideration along with the list of Disadvantages before making a decision on bankruptcy. Remember, the disadvantages do far outweigh the advantages. Never make a decision before seeking help from a debt professional and avoid companies offering to solve all your problems for a fee. You can get sound advice from free organisations, such as the Citizens advice, for FREE. The people helping you to sort out your problems in these organisations have been there; they have all had problems and understand what you are going through. Also, everything you say to them in confidential, giving you some peace of mind. For some people bankruptcy is a real solution to a very real situation. For others it is definitely the wrong choice.