Clearly, bankruptcy is not right for everyone. However, it is a useful debt solution for many people and certainly should not be overlooked because of misconceptions based on a lack of understanding.

If you are struggling with unsecured personal debt, you should certainly familiarise yourself with bankruptcy and whether it might be right for you.

Will you lose your home if you go Bankrupt?

If you are a tenant you can declare bankruptcy with little or no risk of losing your home. As long as you maintain your monthly rent payments you should be able to stay in your property. Your landlord may be told that you are bankrupt. As such if you rent privately it is often a good idea to speak to them in advance.

The worry about bankruptcy if you are a home owner is that you will have to give up any equity you have in the property. However in reality your home is only at risk if there is considerable equity in it. If you have little or no equity,you will normally be able to keep your house. In these circumstances you can buy back the title to your property for a nominal fee meaning there is no risk to your property in the future either.

Since 2011 the amount you have to pay to buy back the beneficial interest in your property is a minimum of £1000 even if it is in negative equity.

Will you have to sell your personal possessions if you go bankrupt?

It is a myth that if you declare bankruptcy, things such as your washing machine, TV and furniture will be taken away. Household goods will only be taken if they are extremely valuable (for example an expensive painting or antique furniture). As such, the majority of people do not have to worry about losing any of their personal possessions.

The only asset that does need to be considered carefully is a private car. If you own a car valued above £1,000 it may be at risk.

However, this does not mean that you will automatically loose the vehicle. If there is a specific reason for its requirement, you may be able to keep it. Alternatively a friend or family member could offer to pay any amount of its value over £1,000 thus avoiding its loss.

What if you are a Company Director?

There are of course some occasions when bankruptcy may not be the right option. This is particularly the case for company directors. If you are a director and wish to remain in this position you cannot declare bankruptcy. Bankrupt individuals are not allowed to act as company directors or act in the capacity of managing a limited company for the period covered by their bankruptcy (normally 12 months).

In addition, there is a certain amount of publicity surrounding bankruptcy. As a bankrupt, your name is advertised in the local newspaper. In addition you are added to the insolvency register which is publically accessible via the internet.