Disadvantages of bankruptcy
Bankruptcy is personal insolvency's "nuclear option" - a last resort to debt problems. That's not to say it is not the right choice for many - it often is (especially if you aren't a homeowner). But, anybody giving bankruptcy advice will tell you life won't be the same after becoming bankrupt - not least when it comes to rebuilding your credit rating in years to come. To help you decide whether bankruptcy is right for you, here’s our guide to the main disadvantages of bankruptcy:
- All your assets, apart from those required for a basic standard of living, will be sold. This is likely to, after a year, include your house.
- You will not be allowed to obtain more than £500 credit unless you first disclose that you are bankrupt.
- Any income you have in excess of that needed for your basic needs will have to be paid to your creditors. For more information on this, read our blog about Income Payment Orders and Income Payment Agreements)
- Your job may be at risk: certain trades and professions will not allow you to work when bankrupt.
- Your credit rating will be affected (probably for some time after your bankruptcy ceases) and there may be other restrictions, such as having your bank and credit card accounts closed.
- Your bankruptcy will be advertised in newspapers.
If you've looked at the advantages and disadvantages of bankruptcy it's worth taking our 2 minute online debt test, just fill in a few details and online analyser will tell you what the best solution to your debt problems is:
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