Declaring Bankruptcy is an extreme method of debt resolution. There are several other ways to recover from an overwhelming debt load that is less expensive and destructive to your financial health. The debt crisis of the late 2000s changed the lives of many people and created an chronic insolvency in the finances of too many otherwise responsible individuals.
Bankruptcy seemed the only option for many people bogged down by insurmountable debt problems. Not until 2013 did the number of individual insolvencies decrease in the UK. While the economy is on the mend, bankruptcy can happen to anyone, but there are several alternatives if you aren’t sure what steps you should take.
You should begin by knowing what bankruptcy entails. It is a serious step and shouldn’t be considered unless the debt load is insurmountable, and there is no available income to solve the problem. It is a necessary solution to those that have no other option, but if you have assets that you would like to retain control of then a bankruptcy is not the option for you. In bankruptcy proceedings, you can be required to sell your home or homes to pay creditors. Also, paying of bankruptcy proceedings can be quite pricey if you are financially strapped. There is an initial £700 charge including £525 official receivers and £175 court fees.
For a year, an individual that has filed for bankruptcy is considered to be “in bankruptcy.” This period comes with many restrictions. One of which is holding a bank account because insolvency laws put financial institutions in a liable position. In addition, you will not be allowed to borrow more than £500 without clearing the transition without disclosing your financial situation to the lender.
While bankruptcy seems horrible it is a viable solution for many people; however, if your situation is not this dire then consider a one of many other debt resolution options. There are options like debt relief orders, individual voluntary agreements, administration orders, debt management plans and informal arrangements. These alternative solutions provide a formal way to manage your debt even offering advisers to help organize your financial situation. Many of these solutions cost large fees so make sure you’ve done the math to make sure that your situation qualifies.