Bankruptcy
Bankruptcy is a formal insolvency procedure started by you or your creditors, where you have debts in excess of £750 and you cannot afford to repay them.
Once you have been declared bankrupt, you lose control of all your assets, which can be used to pay off your debts. This may even include your home.
There are also restrictions placed on your ability to obtain credit. If you need to obtain credit greater than £500, the fact that you are a bankrupt needs to be disclosed. This could have serious consequences for the self-employed.
Your bankruptcy is also advertised in local newspapers.
Bankruptcy may however sometimes be an appropriate alternative to an IVA – for instance where:
- > You can’t afford big enough monthly instalments to merit an IVA
- > You are not a home-owner
- > You have limited assets
In these circumstances, bankruptcy may be an option as you may have little to lose and your debts will be written off at the end of bankruptcy.