Bankruptcy
24 July 2006, 11:10 PM
#1
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Bankruptcy
Seeing a few people asking about it on the other debt thread.
So not asking for me personally, dont think i would consider tbh, but then again i dont know enough about it.
Was just wondering about the Pro's & Con's ?
So not asking for me personally, dont think i would consider tbh, but then again i dont know enough about it.
Was just wondering about the Pro's & Con's ?
24 July 2006, 11:35 PM
#2
Pros
-Relieves you of most of your debts (except court fines, child payments etc) so that creditors/bailiffs etc will stop completely.
-Gives you fresh start
Cons
-Credit rating gone for 6 years, but not really a problem these days with debit and prepaid visa/mastercards and sub-prime lenders.
-Will lose assets of any value especially property, might be allowed to keep your car but usually you'll have to sell it and get one worth around £3000
-Can't be a company director while bankrupt or borrow more than £500 i think.
-Depending on your profession you could be prevented from working.
-Will be an annoying period where you may have to give bonds etc to utility companies, but if you already have accounts they might not bother.
But it only lasts 12 months (or even a lot less if the trusteee has completed their investigation and no creditor objects) and you will possibly have to pay money to the trustee for 3 years if you have a lot of surplus income, usually 50-70% of the surplus. But that is after everything such as Sky, Insurance, Rent, food, Clothing etc so you are probably going to unaffected if you earn under £40,000
If you are a 20/30 something single person with huge debts that would take you 5-6 years or more to pay off anyway then it's a no brainer.
You also don't seem to pay tax for the year you are bankrupt because they tell you to use a nil tax code but I'm not sure how this works.
I have certainly planned for it as an IT contractor, if the Inland Revenue did an IR35 audit or something else and suddenly demanded PAYE/NI for the last 5 years I'd declare myself bankrupt in an instant.
-Relieves you of most of your debts (except court fines, child payments etc) so that creditors/bailiffs etc will stop completely.
-Gives you fresh start
Cons
-Credit rating gone for 6 years, but not really a problem these days with debit and prepaid visa/mastercards and sub-prime lenders.
-Will lose assets of any value especially property, might be allowed to keep your car but usually you'll have to sell it and get one worth around £3000
-Can't be a company director while bankrupt or borrow more than £500 i think.
-Depending on your profession you could be prevented from working.
-Will be an annoying period where you may have to give bonds etc to utility companies, but if you already have accounts they might not bother.
But it only lasts 12 months (or even a lot less if the trusteee has completed their investigation and no creditor objects) and you will possibly have to pay money to the trustee for 3 years if you have a lot of surplus income, usually 50-70% of the surplus. But that is after everything such as Sky, Insurance, Rent, food, Clothing etc so you are probably going to unaffected if you earn under £40,000
If you are a 20/30 something single person with huge debts that would take you 5-6 years or more to pay off anyway then it's a no brainer.
You also don't seem to pay tax for the year you are bankrupt because they tell you to use a nil tax code but I'm not sure how this works.
I have certainly planned for it as an IT contractor, if the Inland Revenue did an IR35 audit or something else and suddenly demanded PAYE/NI for the last 5 years I'd declare myself bankrupt in an instant.
Last edited by KiwiGTI; 24 July 2006 at 11:40 PM.
24 July 2006, 11:35 PM
#3
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Find it funny that you actually have to pay for it.........
Can remember watching a programme not too long ago about bankruptcy which basically said it has lost the stigma etc. A guy on there was just out of college and was actively encouraged to file. Think he had debts of around £15k but had no immediate income.
The bankruptcy order is discharged after 3 years but there are plans to change the legislation and reduce this to six months. I can only imagine that such a move would increase the number of bankruptcy requests several times over.
Can remember watching a programme not too long ago about bankruptcy which basically said it has lost the stigma etc. A guy on there was just out of college and was actively encouraged to file. Think he had debts of around £15k but had no immediate income.
The bankruptcy order is discharged after 3 years but there are plans to change the legislation and reduce this to six months. I can only imagine that such a move would increase the number of bankruptcy requests several times over.
24 July 2006, 11:46 PM
#4
Automatically discharged 12 months after the bankruptcy order.
However 3 months after the creditors report is issued (within 8 weeks of the order) the official receiver will review the case and if there are no further inquiries he/she will file notice of your early discharge, giving creditors 28 days to object to the early discharge.
So yes, all going well a bankruptcy will only last 6 months.
Although repeat offenders can be bankrupted for up to 15 years.
However 3 months after the creditors report is issued (within 8 weeks of the order) the official receiver will review the case and if there are no further inquiries he/she will file notice of your early discharge, giving creditors 28 days to object to the early discharge.
So yes, all going well a bankruptcy will only last 6 months.
Although repeat offenders can be bankrupted for up to 15 years.