The Myths and Shortcomings of Bankruptcy

When the idea of bankruptcy comes up as an alternative when you are falling behind on your debt, it can get mixed reactions. There are a lot of misconceptions about bankruptcy, both good and bad. For example, it is a myth that the only people who declare bankruptcy are those who are forced into it by their creditors.

Many people use the bankruptcy laws to help them start a new chapter in their lives when personal or business debts simply become too large to handle. Many times that debt gets run up because of a personal tragedy or unemployment. So you are not becoming part of the criminal element using a legal tool that was created to help out good people in tough situations.

What stays and what goes?

There are also some misconceptions about what you may lose and what is protected by bankruptcy. It is not true that a bankruptcy will result in you losing all of your property and monetary resources. But whatever is deemed nonessential will be confiscated to be used to settle as much of the debt you are walking away from as possible. So you will not lose your home, your vehicle that you need to get to work or essential property that is part of your life. If you have a lot of luxuries, especially high priced ones like a second home, more cars than are needed for employment or expensive items inside the home, they may be vulnerable to being liquidated as a result of the bankruptcy.

For more information about the bankruptcy process take a look at our how bankruptcy works section.

Writing-off debt

On the plus side of bankruptcy, all of your outstanding debt with some exceptions will be resolved as a result of the bankruptcy. That will include your credit card debt. You will be protected from any additional efforts by those lenders to collect that debt. That means you can no longer be harassed by phone or by mail by the lenders or by debt collection agencies who may be trying to resolve your previous outstanding debt. This doesn’t mean the more unscrupulous people in that category won't try to pressure you. But it is against the law for them to do so which means you can have it put to a halt pretty quickly once the bankruptcy goes through.

Find out more about the cost of bankruptcy here.

Bankruptcy being made public

There are some negative affects of bankruptcy that make it a serious step to take and one you should not take lightly or without seeking professional bankruptcy help. In the UK, bankruptcy is a very public affair. When the bankruptcy goes through, your name gets published in the papers as do the names of everyone you owed money to. That can be an embarrassing event for anyone. So a bankruptcy is not something you can secretly pull off so that nobody knows about it.

Unfortunately bankruptcy shuts down your ability to operate your own business. If you have gone through bankruptcy, you cannot own or run a business in the UK for a number of years. Your bank accounts are shut down and you are not allowed to attain credit on a bank account or credit account without obaining legal consent for upto five years.

If you need to speak to a professional bankruptcy advisor or require more information on bankruptcy call Debt Response now on 0800 781 7878.

Any information you provide will be kept completely confidential.