By Joseph Kenny
There was a time when bankruptcy was probably the biggest
stigma that could be attached to anyone in business.
those days are long gone. Today, bankruptcies are fast,
efficient and frequent court procedures designed not as a
punishment for the creditor, but as a means of drawing a line
under un-payable debts and allowing everyone to move on. While
most people would not exactly like to be made bankrupt, in
cases where it becomes necessary, it is seen as a welcome
release rather than a humiliating penalty.
When You Become Bankrupt
Bankruptcy is what happens when you simply cannot repay your
debts. How it comes about is one of your debtors, someone who
you owe more than £1,500 to, will ask the court to make you
bankrupt. A trustee will be appointed to carry out the task
then all your creditors will inform him of how much you owe
them. He will gather up all of your assets, and use them to
off the debts. Creditors will be paid proportionately, which
means that if your assets are not enough to pay off the debts
in full, they will each get the same proportion of their debt
What Are Bankruptcy’s Disadvantages?
The disadvantages of this are obvious. By gathering up all
assets, the trustee will essentially leave you with nothing.
Your home, your car, your savings, everything that he
a worthwhile asset will be gathered up and sold. If you have a
family, it can be quite traumatic, as they have to leave their
home. If you rent your home then this will not affect you, as
there is nothing there for the trustee to take. Your personal
effects such as clothes and most furniture, will not be taken
by the trustee, as they are considered too personal and
insignificant to take.
And The Advantages?
The advantage of going bankrupt however is that it gives you a
clean slate. Regardless of how much you owe, and how much you
can afford to pay back, at the end of the process, you will
emerge with a completely clean slate and will not owe anybody
anything. Even if someone forgot to make a claim to the
trustee, you will no longer owe them anything.
The Future After Bankruptcy
After your bankruptcy has been finalised and you have moved on
you will be able to start rebuilding your financial, and
probably personal, life again. Bad credit ratings will ensue,
but rebuilding your credit is possible. Just like a child,
steps are all that is required. Step by step, more credit
options will become available and after several years your
credit rating will become ‘average’ if you keep focused and
don’t fall into any quick fix traps.
While the process of bankruptcy may take a while, during which
you will not be able to control your finances and may have to
give part of your income to the trustee, it is generally seen
as worth it, and you will emerge ready to make a new start.
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