Effects of Bankruptcy
What effects does bankruptcy have on me?
You will be instantly free from all debt and will no longer be responsible for all of your previous debts. It is a completely fresh begining for your whole family to and nothing can stop from being able to build a home, career and a life that you can be proud of. Remember bankruptcy isn’t the end its a new begining. You are immediately protected from all existing creditors who form part of your bankruptcy.
You should understand that it is extremely unlikely that you will be able to borrow money from a high street lender. It is not unusual for a self-employed person to obtain start up or project funding from a private source which is acceptable for an un-discharged bankrupt (providing the lender is aware of your circumstances).
Once you are discharged from bankruptcy (usually after 12 months, but sometimes sooner) you will be able to rebuild your credit file.
Bankruptcy restrictions
Following bankruptcy certain restrictions are placed on you. These are as follows:
- You lose control of your assets (house, savings, expensive car (over £2500)
- You cannot obtain credit for over £500 without the declaring that you are bankrupt..
- You cannot take any part in the promotion, formation or management of a limited company (LTD) without the permission of the court.
- You cannot trade in any business under any other name unless you inform all persons concerned of the bankruptcy.
Is my occupation affected?
If you go bankrupt then you will be automatically excluded from some professions:
- Member of the Law Society
- Estate Agent
- Insolvency Practitioner
- Stock Broker
- Pub Licensee
- You cannot act as a company director
- Charted Accountant / Lawyer
- Justice of the Peace (JP)
- Member of Parliament.
- Member of the local authority.
For some other professions, dismissal would be at your employer’s discretion. Check your employment contract or consult your HR department or union.
Bankruptcy Pros and Cons
- All of your pre-existing debt is wiped off.
- Creditors can no longer hassle you.
- First-time bankrupts are usually discharged within 12 months (sometimes sooner).
- If you rent, live with parents or have no equity you don’t risk losing your home.