If you are in debt for a long period and get stressed about paying back all the borrowed money then have a reason to worry. At first, there are many options available to help you to get back on your feet. But if you are not able to achieve anything financially then you can file for bankruptcy. It is one of the ways to solve your financial problems.
It is not easy to be bankrupt and there are both advantages and disadvantages. Bankruptcy is a status for a person or business that cannot repay the debts. Once you do that, your assets are valued and can be used to repay the debt. Once you are categorised under this, you will have to face many restrictions financially. It is also a chance to consider living your life in a new and improved manner.
What are the benefits to file bankruptcy?
Well, one of the major benefits is that once the bankruptcy is over, you get to start again after one year. Once you are bankrupt, you no longer need to deal with your lenders. You can still keep your household goods and you can also keep some money to live life reasonably. If you are facing any court cases then they will stop as soon as you are bankrupt. If you didn’t own a house before getting bankrupt and were living in a rented house then you can keep on living in the house unless the lease prohibits bankruptcy.
What are the cons of filing bankruptcy?
To start the process, it can cost you 680 pounds and this amount of money can be hard to manage when you are already in debt. If you already have a high income then you will get highly charged to pay your debts for the next three years. So no feeling free after one year for you.
One of the disadvantages of owning a house is that you have to sell it to pay your debt. Don’t worry about getting homeless as your local authority will help you get a house to live in. Not to forget about cars and other luxury items.
You will find it extremely difficult to get any credit after getting discharged as your credit score will be affected for the next six years. If you are in the age of getting a pension then it might be taken away from you. If you work in professions such as law, banking, or accountancy then you can lose your job.
Owning a business will also not help as you have to close it down and sell the asset. It also affects your immigration status.
How to know if it is right for you?
Now as you have known about the cons and pros of bankruptcy, you might still wonder why you should do it. Well, this is a good idea for you in case you own little value and have little or no equity in your house. You don’t know how you can pay off your debt. You could no longer see the situation improving. You own a business in the UK or maybe live somewhere during the past three years and now have moved to European states.
You should also consider that if your debt is less than 20,000 pounds and assets are less than 1000 pounds then you can choose another option.
Alternatives to Bankruptcy
You owe less than 20,000 pounds and have only 50 pounds per month to pay your lender. Assets are under 1000 pounds except for household goods and vehicles then you can apply for a debt relief order. If you can arrange to pay 100 pounds per month to pay your debt then you can come to an individual voluntary arrangement to pay your debt off over a fixed period. If you have unsecured debt of fewer than 1000 pounds and have county court judgement then you can get an administration order.
These debts don’t get included in Bankruptcy
Social fund loans, Magistrate court fines, maintenance and child support payments, confiscation order payments, student loans, secured loans, debts due to personal injury or death, tax credit overpayments, or you owe a debt to someone.
If you haven’t fallen into this category and are just getting an idea about what could happen if you go under too many debts then we can help you here a bit. If you need the money and want to lend some money then you can apply for secured and unsecured loans from direct lenders. You can get different personal loans, doorstep loans like provident in different parts of the UK such as Glasgow, London, Edinburgh, etc.
Getting bankrupt is not a good thing and is a nightmare for everyone. It has destroyed many people and can do it for anyone. To avoid being fallen into this category, you must start managing your finances in the right way today.
