Is Bankruptcy the Best Option 

Is Bankruptcy the Best Option? Written by John A Waller, Consultant. Reviewed: July 22nd, 2024.

Bankruptcy, a potential solution, can offer a sense of relief if:

– You cannot find any way to pay off the debts you owe.

– You don’t own many valuable items, and your property has little or no equity, so the value of your debts is higher than the value of your assets.

– It is unlikely that your situation will improve.

You may use Bankruptcy when an individual owes substantial amounts of money and cannot repay it.

Bankruptcy is a common process for many who owe a lot of money. It will clear all secured and unsecured debts. However, it is a daunting insolvency procedure for individuals. 

Individuals in Bankruptcy have all their assets taken away by a “trustee” and their value realised. Then, all monies raised from the sale of assets are distributed among the bankrupt’s creditors. 

Bankruptcy requires examining the debtor’s income. Then, a repayment plan is drawn up based on affordability once average household expenditures are deducted. Once the Bankruptcy ends (usually 12 months), the debtor remains discharged, and the remaining debt is written off.

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Bankruptcy, however, remains legally binding with future consequences and is not an “easy way out.” As an insolvency specialist with a specialised bankruptcy team, HBG Advisory is qualified and experienced to help you consider all the available options. Subject to your circumstances, an Individual Voluntary Arrangement (IVA) or Debt Management Plan may be a better option. It is essential to explore all options before making a decision. 

Any creditor owed more than £750 may apply to the Court to commence bankruptcy proceedings. However, you may dispute the petition. Therefore, please contact HBG Advisory immediately. We will support you by advising you on the best action to protect yourself.

Am I Suitable For Bankruptcy 

Bankruptcy should suit individuals who owe more than £15,000. (both secured and unsecured). The individual(s) must not make any repayment and:

  • Do not own their own home or 
  • Accept the sale of their property to repay their debt.

Bankruptcy Advantages:

  • Usually, the term lasts twelve months. 
  • Substantial debt is then legally written off. Once discharged from Bankruptcy, no additional money remains owed to the individual’s former creditors.
  • Bankruptcy no longer bears the stigma it once had.

Bankruptcy Disadvantages:

  • If you own your home or own assets? You risk the sale of your assets to repay your creditors;
  • The debtors’ financial affairs require scrutiny and full disclosure;
  • A notice is posted in the London Gazette along with local media and your credit file (which remains on record for six years) advising of the Bankruptcy;
  • Restrictions apply during the term of the Bankruptcy;
  • You may be required to declare Bankruptcy to your employer or professional body.

How much money will I be required to repay?

It varies considerably and depends on your earnings and outgoings. 

HBG Advisory provides ‘free’, no-obligation advice concerning Bankruptcy. Our team remains approachable, empathetic, and willing to listen to your concerns.

Commencing dialogue with a Licensed Insolvency Practitioner (IP) demonstrates you are taking a positive step to combat your uncontrollable debt and put yourself back in charge. 

The Bankruptcy Process And Is Bankruptcy The Right Option For Me?

The process:

Stage 1: Application

Stage 2: Assessment

If the adjudicator makes you bankrupt:

Stage 3: Payments

  • Assets you own are sold to pay your creditors.

Stage 4: Discharge

Once 12 months have passed. It is usually for an individual to be released (‘discharged’) from bankruptcy restrictions and debts. However, assets remaining in your estate while in Bankruptcy may still be sold to pay your debts.

When you do not live in England or Wales

The process, when living in Scotland or Northern Ireland, is, however, that you are unable to make an application to become bankrupt in England or Wales.

For further help and support:

Check out the following:

  • Citizens Advice ( A bankruptcy advice guide);
  • Money Helper: options for clearing your debts in England and Wales;
  • make contact with the National Debtline.

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