Guide To Bankruptcy


Visitors: 526

Here is a useful guide to bankruptcy. It should be noted that bankruptcy is not to be entered into without first having sought professional advice.

Bankruptcy is seen as the last resort. Bankruptcy is perceived to be the only way to escape the ever-constant demands for payment by bill collectors and credit companies alike.

Bankruptcy is not something that should be rushed in to. Certainly there are times when it can be very useful, but there are other times when declaring bankruptcy would be a big mistake.

The purpose of bankruptcy is to convert your possessions, and any wages you receive, into lump sum and instalment payments for creditors. A debtors purpose to apply for their own bankruptcy is to form a moratorium (a group of creditors) to agree part repayment of all outstanding debts, and when the agreed repayment has been met, to have a ‘clean slate’.

The constraints which are put upon you once you are declared bankrupt make it only a viable option in the most extreme of cases. It is more likely that an Individual Voluntary Arrangement will be the answer to severe debt problems, since it provides much of the relief offered by bankruptcy but without the severe constraints which bankruptcy imposes.

Individual creditors cannot take action against you. They must make a claim through the ‘trustee’ (the name of the person who controls a bankruptcy) or write off their debt.

When appointed the trustee will advertise your demise in a number of newspapers to give all of your creditors a chance to make a claim against the bankruptcy.

It is also the responsibility of the bankrupt to make an honest list of all creditors: as a bankruptcy is also a chance to start again the bankrupt should ensure every creditor is notified. Not that a creditor could make a claim against you after a bankruptcy, but it will get all your creditors of your back.

A bankruptcy order takes precedence over all other forms of debt recovery. All creditors have the right to be included in the list of creditors, and benefit from any payment arrangement.

If you own your home you would be fortunate to keep it. You can keep household ‘essentials’ such as, bed, fridge, heating appliances but not, TV's, video recorders, computers - unless used for work, or used to get work.

All ‘tools of trade’ are protected, but will be scrutinized.

A bankruptcy will normally last until the third anniversary of the bankruptcy order. During this time you are not allowed to hold a public office, become a company director (or in all but name run a business) and you must not apply for credit over £250 without notifying the lender of your bankruptcy.

Your credit file will show your bankruptcy for six years from the bankruptcy order.

You may freely reprint this article provided the author's biography remains intact:

About The Author

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the website.


Article Source:

Rate this Article: 
Mortgage after Bankruptcy - Bankruptcy Discharged Yesterday? Purchase a Home ..
Rated 4 / 5
based on 5 votes

Related Articles:

Bankruptcy Guide

by: Mansi Aggarwal (October 13, 2005) 

Guide On Overcoming Bankruptcy

by: Francisco Segura (April 15, 2008) 
(Finance/Bankruptcy Tips Advice)

Bankruptcy Advice Guide

by: Mansi Aggarwal (July 02, 2006) 

Personal Bankruptcy Tips Guide

by: Mansi Aggarwal (July 10, 2006) 

A Helpful Guide to Bankruptcy Law and Its Nuances

by: Saurabh K Jain (July 16, 2008) 
(Finance/Bankruptcy Tips Advice)

Personal Bankruptcy Advice Guide 101

by: Mansi Aggarwal (July 10, 2006) 

A Guide to the Complexities of Bankruptcy Chapters and Laws

by: Jon Arnold (July 14, 2008) 

Chapter 7 Bankruptcy vs. Chapter 11 Bankruptcy & Bankruptcy Loans To ..

by: Dean Shainin (May 23, 2006) 

Personal Bankruptcy Tips - Will Bankruptcy Save Or Destroy Your Financial ..

by: Josh Ramos (September 05, 2008) 
(Finance/Bankruptcy Tips Advice)

Mortgage after Bankruptcy - Bankruptcy Discharged Yesterday? Purchase a Home ..

by: Nathan Dawson (October 26, 2005) 
(Finance/Mortgage Refinance)