The question most people in the UK ask themselves when they go into a large amount of debt is if they should file for bankruptcy. Are there certain types of people that should file for bankruptcy?
The biggest thing is that don’t file for bankruptcy unless it is your last resort. This is who the vast majority of the people are who file for Bankruptcy in the UK. They have searched all their options and have no other alternative. In the UK, individuals go bankrupt not companies.
The first thing to know is that you can only file or affirm yourself bankrupt if you truly debts are more than your credits so to speak. If the amount of your income plus the amount of your assets is less than your total debt then you would be able to declare yourself bankrupt. Assets are things such as your house and car.
A person can declare themselves to be bankrupt if they have exhausted methods such as Debt Consolidation Loans, Informal Repayments (these can be made either through a debt management company or by directly with the lender), or IVA’s. If these have not been an option for them they will then file the appropriate bankruptcy forms.
Can Homeowners File For Bankruptcy?
Non Homeowners are more likely to file for bankruptcy than Homeowners are; the reason being is that they may not own any real assets. They usually are renting their home or are living with someone that owns the home. If they are renting the home and have kept up the payments they may be allowed to stay in the home. They will assess the value of your car and you will be given the option of selling it and buying a cheaper one if the car is in excess value of £1500.
Homeowners have a harder decision to make on whether or not to declare bankruptcy. Your house could be sold if you have equity left on the home to pay some of your creditors. If you have no equity or hardly any, you may be able to keep your home. If a homeowner has a large sum of equity most of them will opt to do a Debt Management Plan or an IVA.
Can My Business Go Bankrupt?
If you own a business you may want to think twice about going bankrupt, the Official receiver will more than likely close it down, dismiss your employees and sell it off to pay off your creditors. This will likely affect you professionally, as well as putting many people out of work depending on how many people you employ. This is something to think about before you declare. Also if you do declare you will not be able to reopen a new business under any other name without permission from the court and if they do give you permission it does have to be under the same name you had before.
Any Licenses or Registrations that you may have received through your job may be impacted or considered null when your bankruptcy is declared. Check with the offices that issued them to find out how the Licenses or Registrations will be affected.
Something else to think about is that if you are thinking about declaring you may want to look into if your job will keep you on if you are declared bankrupt. Bankruptcy does have a job restriction to it on certain main professions such as certain legal fields such as Law Society, Financial fields like Stockbroker or Practitioner, Estate Agency or Pub Licensees. Also you are not allowed to be a director of a limited company, or even be involved in the management of a company during the time of your bankruptcy.
Knowing all this information will definitely give you a perspective on whether or not to declare.