Bankruptcy
Considerations:
Credit rating
The first major consideration to think through is the effect bankruptcy will have on your credit rating.
The reference to bankruptcy is the most severe notation which can exist in judging your credit worthiness.
Inevitably this will impair your ability to get future credit.
This may not seem a major consideration at the point you are thinking of making yourself bankrupt as you may believe you have no further need for credit.
This would however be a mistake as even simple payments by installment for home and car insurance may become difficult.
In these instances you effectively buy an annual contract up front with the payments spread over a year.
Without the ability to pay by installments you will need to find all the money up front for such transactions.
Effect on Assets
The second major consideration when thinking about bankruptcy is the effect on your assets.
When you petition for bankruptcy and this is approved by the court your valuable assets will be sold to realize some return for your creditors.
Not all assets are included in this but things like a valuable car or equity in a house will be lost to you.
When dealing with a house sale the Official receiver will typically give you one year to sell the property yourself.
If it is not achieved in this time the sale is more likely to be forced which may result in a lower overall market price.
Wider Finances
The third major consideration relates to your wider financial arrangements.
Bank and building society accounts may have to be closed along with other credit cards.
Transactions with hire purchase companies or other debtor - creditor - supplier agreements may require you to hand back the assets.
Employment Prospects
The forth consideration to think about is your future employment prospects.
Certain professions and role preclude individuals who have become bankrupt from taking up a role.
Other employers in their interview process may enquire about bankruptcy which may make it harder to get future positions.
Stigma
Finally the last consideration is a highly personal one.
Within the UK there is still a stigma about bankruptcy.
The bankruptcy petition if successful is made public for your community to know about.
This of itself can be a negative but a possible larger negative is the way individuals view themselves in the longer term.
The effect of bankruptcy can lower individuals self esteem which inevitably has consequences which extend beyond the financial implications of bankruptcy.
Beyond these criteria there are no other factors you have to satisfy. Whilst it is a simple process to undertake however the consequences are impossible to undo.
Use our FREE Credit Report to see if you are eligable for an IVA.
Bankruptcy: Main
Bankruptcy: Criteria
Bankruptcy: Considerations
Bankruptcy: Costs
Bankruptcy: Merits