Find out about the main Bankruptcy advantages and disadvantages. Depending on your circumstances going bankrupt may be a sensible debt solution to consider.
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Bankruptcy Advantages and Disadvantages
What are the advantages and disadvantages of Bankruptcy in England & Wales? The key advantages such as debt written off explained. The major disadvantages such as the affect on your home. To find out more please visit http://beatmydebt.com/bankruptcy/bankruptcy-advantages-and-disadvantages
The main Bankruptcy Advantages
1. Quick to Implement
Once you have decided to go bankrupt the solution can be implemented very quickly. After submitting your application form on-line you will normally be bankrupt within 2 working days. You are then given immediate legal protection from your creditors.
2. Lasts just 12 months
Bankruptcy normally lasts just 12 months. After that period you will are discharged. However if you are required to make a monthly payment towards your debt these will last for 3 years. In addition your Credit Rating will be negatively affected for 6 years.
3. Debt Written Off
After you are discharged from Bankruptcy most of your outstanding unsecured debt is written off. The only exception is if you are making payments towards your debts which can last for 3 years.
4. You pay nothing unless you can afford to do so
If you have no disposable income then once you are Bankrupt you will not have to pay anything more towards your unsecured debt. However if you can afford to do so you will have to make monthly payments for 3 years.
5. Keep your reasonable assets
After you go bankrupt you are allowed to keep all of your reasonable household possessions. Items such as your electrical goods, furniture laptop, tablet computer and mobile phone are exempt from the process and are not at risk.
The main Bankruptcy Disadvantages
1. Your home may have to be sold
If you are a home owner with equity in your property your share of this will normally have to be released for the benefit of your creditors. As a last resort the property may have to be sold to achieve this.
If there is little or no equity in your property it will not normally be at risk. As such in certain circumstances bankruptcy is an appropriate debt solution if you are a home owner.
2. An expensive car may have to be sold
In bankruptcy you will only be allowed to keep your car if it is worth £1000 or less. If your car is worth more you will normally have to sell it and buy a cheaper one. Alternatively you may be able to keep the car if a friend or family member can raise a sum equal to the difference between the value of the car and £1000.
3. Credit rating affected for 6 years
A record that you have go bankrupt will be recorded on your Credit File. This will remain there for 6 years and negatively affect your credit rating. During this time it will be difficult to obtain further credit or get a mortgage.
4. Unable to work as a company director
You will be unable to act as a company director or be involved with the management of a limited company while you are bankrupt. Other professions that are affected by bankruptcy are solicitors, accountants, HGV operators and some roles in financial services.
5. Name included in the Insolvency Register
Despite what you may have heard Bankruptcy is actually a discrete procedure. Your name is not published in your local newspaper (unless you live in Northern Ireland) and few people other than your creditors will be told. However your name will be entered onto the Insolvency Register which can be publicly searched via the internet.
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