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Personal Bankruptcy

Bankruptcy is the last resort for someone who has become out of their depth in debt. This means that you effectively start your financial life with a clean sleight, but it also means any assets that you have accrued during your life are wiped clean.

This will include your home, your car and even your pension in some cases. Another issue is that it is very unlikely that you will ever be able to borrow money in the up and coming future, as well the inherent risk in losing any business assets that you have.

When it comes to personal bankruptcy, the golden rule is that in 99% of cases you should avoid it at all costs.

So what is the difference between personal bankruptcy and other similar debt relief options? In the case of a business where the business is incorporated (a limited company with articles of incorporation, shareholders and directors) the company is a distinct entity from the persons who own and manage it. In this case, as a general rule, a person will not be made bankrupt as a result of the actions of a company.

Where you are the proprietor or a partner in a business, any business finances are considered to be directly apportioned to you, therefore personal bankruptcy is the only option.

Another term that is different from personal bankruptcy is debt settlement. Debt settlement is the process where by a debt management company will negotiate debts on your behalf, and therefore your creditors are will not attempt to claim your assets in return for payment.

Should you opt for debt settlement your credit rating will be affected, but this is generally a better option, especially if you own your own. Always remember that personal bankruptcy is a last resort.

Bankruptcy has a lot of myths that surround it, such as many people believe that simply signing ownership of their home to someone else will mean that they could still own it in practise but not in a legal sense. This is something that legislation has attempted to challenge, and as a result you will have to have done this before your financial problems occurred.

Another myth surrounding bankruptcy is that you will lose your home and any assets immediately. This can often be a lengthy process, and firstly involves your creditors applying to claim them from you.

Bankruptcy can also affect someone’s ability to get a job and can particularly affect those involved in the strategic operations of a business. An example of this is that you may be unable to be a company secretary or sit on the board of directors of a company.

Personal bankruptcy is an upsetting and embarrassing time for those involved. It is not beneficial for the creditors or the person, and that is why it should be avoided at all costs. Despite this, bankruptcy may be the only choice for some people.

For a complete debt management solution, visit www.finance-inc.co.uk

For IVA (Individual Voluntary Arrangement) visit www.1va.co.uk