Maureen is an experienced Insolvency Manager and is an expert in personal debt solutions and debt payment programmes.
She deals with challenging, complex personal debt cases with professionalism and patience.
‘Bankruptcy’ is one of the most loaded terms in the English language and the connotations are all bad.
People feel bad about bankruptcy because they feel they are not honouring their obligations or that they are reneging on agreements with lenders. However, this is not really seeing things as they truly are.
No-one sets out with the intention of piling up debts and then declaring themselves bankrupt to get out of them – or at least only a very small number of people do.
The vast majority of people are simply caught up in a situation that has got beyond them and find themselves unable to deal with the debts they have accumulated.
Sometimes, and this is frequently the case, other factors have come into the equation and debts have arisen through a change in circumstances through separation/divorce, loss of employment or illness. However your debts have arisen, you are still left facing the reality that you simply cannot afford to pay or even to service your debts.
Each bankruptcy case is different – as are the reasons why people are compelled to go down this route, but bankruptcy can be a good way forward for people in certain situations.
Here we explore just what they are and why bankruptcy might be something positive for you.
The causes can be diverse:
Going bankrupt in these circumstances can really provide a way out of an otherwise impossible situation. It can also mean that you are able to take care of your family by dealing with the financials that could overwhelm your family circumstances.
Warning signs that you are nearing or in a position where you should consider entering bankruptcy include:
If you recognise the above problems, then you should talk to an Insolvency Practitioner such as TC Debt Solutions to explore the options open to you. These will include bankruptcy, but not be limited to it: it all depends on the nature and extent of your debts.
Bankruptcy can safeguard money that you need for the future. It can help to protect your retirement. Trying to avoid bankruptcy can be like stealing your future as you use up money now that you could invest for your long-term future.
Going through bankruptcy will help you to do this by getting to the heart of your problem – the inability to pay your debts…and dealing with it quickly.
Depending on the level of your debt and the amount of equity that you have, it may also be possible to protect assets such as your home and car (depending on its value).
Barriers to entry are low. If you live in Scotland, you could qualify for bankruptcy if you have £3,000 (£1,500 under Minimal Asset Process) or more of unsecured debt and are unable to pay them on their due date.
The application fee to the Accountant in Bankruptcy (AiB) is just £200 and you can make an application, provided that you have not been made bankrupt within the past 5 years.
If you enter bankruptcy, you can still operate a current account. However, your current bank may freeze or close any account you currently hold when you declare bankruptcy and they may withdraw any overdraft facility.
The best advice would be to get a bank account opened with a bank that you do not owe any money to. Changing banks really can be a good idea in these circumstances.
It is highly unlikely that anyone will find out if you don’t tell them yourself. Details of bankruptcies are recorded in the Register of Insolvencies (ROI) and are available online, but people are unlikely to consult it without reason.
One of the chief objections that people raise to the idea of becoming bankrupt is the thought that it will have a disastrous effect on credit scores. The truth is that, by the time people enter bankruptcy, their credit scores have already taken a hammering.
Entering bankruptcy should be seen as dealing with your debt quickly and effectively so you can eventually rebuild your credit profile. One of the really good things about bankruptcy is that it is a quick solution for dealing with otherwise insurmountable problem debt.
Entering bankruptcy means that you will generally be discharged after about 12 months. It’s a quick way to remove your unsecured debts and re-build your life. However, you will be under an obligation to pay contributions for 48 months.
Your Insolvency Practitioner will complete the Debtor Application Pack that has to be submitted to the Accountant in Bankruptcy (AiB).
Your Insolvency Practitioner will usually be appointed by you as your trustee who will deal with all your creditors for you, taking control of your assets and paying back your unsecured debts as far as possible. The vast majority of your debt will almost certainly be written off.
Bankruptcy allows you to gain control of your life. For example, in trying to stave off the inevitable, some people raid their pension funds. This may be a bad idea: you are going to need these funds, and going bankrupt will mean that you are no longer using your future to try to resolve your present.
It is vital not to spoil your future: this is why bankruptcy should be one of the options that you consider.
Once you apply for bankruptcy, creditors will no longer be able to take action to collect unsecured debts against you. Entering bankruptcy also means that your credit rating could start to improve sooner than it would under other debt solutions.
You will also be able to start living within your means and avoid the same thing happening again: you will not have any credit cards to fall back on.
Entering bankruptcy will break the treadmill of out-of-control credit card debt, which is one of the most demoralising forms of debt. This kind of debt can otherwise stretch years ahead and become impossible to pay back.
Entering bankruptcy is a big step to take and is one of a number of possible options. However, for the right set of circumstances, bankruptcy can be a good option and a path to a debt-free and brighter future.
We are happy to discuss bankruptcy options with you.
We offer a free initial discussion to find out how we can help. One of our advisers can call at a time suitable for you, or if you prefer, we can meet privately at our offices, your home or at a local coffee shop.
To arrange a free confidential consultation, please contact us today here.