Bankruptcy

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What is Bankruptcy?

When an individual reaches the point where they are simply unable to pay off their debt, even after attempted negotiations, settlements, and consolidations, bankruptcy is the only option left on the table. When somebody declares bankruptcy, any (applicable) debts left unpaid after the conditions of the bankruptcy have been met will be forgiven.

What You Need to Know

- Bankruptcy generally lasts about a year.

- While most of your debt is forgiven, some debt is exempt, and it can be difficult to obtain credit or certain jobs.

- You will be assigned an Official Receiver who will investigate your financial circumstances.

How You Are Affected

All debt that was recorded during the court proceedings will be forgiven as long as the conditions of the bankruptcy are met. Your existing assets will be confiscated and divided amongst your creditors.

Negative Implications

The Official Receiver can sell anything you own that is deemed unnecessary, including your home, vehicle, and personal belongings. You are required to inform any lender that you are an undischarged bankrupt if you apply for more than 500 pounds of credit.

Several jobs will be out of your reach. This includes work in the military, police force, local council, and government office. Some employers will deny you work, and you can not be a director for a company. Without legal permission, you can not help promote, form, or manage a limited company. Work as an accountant or solicitor may also be hindered.

In the business world, you must provide people with your real name, or inform them of your bankruptcy.

If you receive a Bankruptcy Restriction Order:

- You can not be the Governor of a School, or a Justice of the Peace
- You can not join Parliament
- You can not join the Local Authority

The order will stay on file for six years. Family members and employers may be contacted by the Official Receiver. The bankruptcy section of the newspaper will publish your name. Until three months after you are discharged, you will be listed on the Individual Insolvency Register.

What Will Happen to your Assets?

The Official Receiver will decide which assets to sell in order to pay off your creditors. Some property is exempt from this risk, including:

- Property that you need for your job
- Items that you need for personal use (clothes, furniture, cooking utensils, etc.)

If you have a regular source of income, you will be required to make payments for three years. The payments will be based on what the Official Receiver considers to fall within your budget. If your financial situation improves or becomes worse, you will need to pass this information on to your Official Receiver so that they can update your arrangement.