Bankruptcy Help - A Guide To The Bankruptcy Process
If your debts are causing you financial hardship, you may be able to obtain relief through bankruptcy. A bankruptcy is a binding legal solution for people who are unable to pay their debts, or for those who are having extreme difficulty making their payments.
When a court declares that you are bankrupt, they will usually take possession of your assets to pay off your outstanding debts. A bankruptcy lasts for about one year after which your record is cleared of all debt obligations.
Will the court take all my property in a bankruptcy?
No. Certain types of property are exempt and not considered as “assets.” For example, household items needed by you and your family are not classified as assets. Also equipment needed for your employment is excluded. In some cases though, you may need to sell your home to pay off your remaining debts. The Official Receiver analyses your employment and other income to calculate how much of your income should be paid to your creditors. In some cases, you may be required to sign an income payments agreement that will oblige you to make such payments for periods of up to three years.
If you happen to be the sole owner of a business, that business will be shut down and the property sold to help pay off your debts.
- Once completed, you are absolved of all your debts. However, you remain responsible for any debts incurred between the time of filing for bankruptcy and the dissolution of your debts.
- Creditors may no longer harass or contact you, nor take any legal action against you.
- The court will only require you to pay as much as you can afford. They will take into consideration your living expenses.
- A bankruptcy gives you an opportunity to start anew and to begin building up a new credit record.
- You stand to lose much of your personal property including possibly your home.
- All your credit cards and bank accounts will be terminated
- In the short term, your financial reputation will suffer. The bankruptcy is publicised so you may suffer some public humiliation.
- Credit is more difficult to obtain after you have been declared bankrupt.
- If you are an immigrant, bankruptcy can negatively impact your status.
If you decide to file for bankruptcy, you are best served by seeking out professional assistance. With the help of a legal expert, you can avoid many mistakes that may cost you in the long run. You will need to pay fees totalling £510 to obtain a bankruptcy. The total does not include solicitor’s fees.
Also, remember that the court does not have to accept your bankruptcy petition. The court may decide that you are still able to continue paying your debts with court assistance. In such cases, they may recommend other non-legal solutions to help you with your financial problems.
There are certain organizations like the Citizen’s Advice Bureau and National Debtline that provide debt management assistance to consumers. There are also some other legal options that one can take besides bankruptcy. For example, if you are on low income, you may qualify for a debt relief order.