When a person is unable to pay off their creditors, they can file for bankruptcy, declaring that they don’t have the financial means to do so. While bankruptcy may sound like an easy way out of your financial woes, it is a complex procedure and does not mean that you’ll no longer be needed to clear your debts.
You can begin your financial life afresh after entering bankruptcy; however, take the decision only after consulting an insolvency expert to know what you’re getting into and how it will affect your future income. Here are seven frequently asked questions that will help you understand the process.
Can an individual enter bankruptcy?
Yes. Anyone can file for bankruptcy. Whether you are a company, partner in a firm, self-employed professional or a solo entrepreneur, you can claim bankruptcy if you’re unable to pay your debts. Your creditors can also file a bankruptcy request against you in court if you’ve been unable to pay them.
What are the major effects of entering bankruptcy on the life and work of a person?
Several legal restrictions come into effect once an individual is declared bankrupt. Some of the implications of entering bankruptcy are as follows.
- You may lose your personal assets so that your creditors can be paid fairly.
- Bankruptcy affects your credit rating negatively.
- You can begin anew financially; however, restrictions apply. For instance, you cannot open a new bank account without informing the bank of your bankruptcy status. You may not use overdraft facility or issue cheques.
- Your future income may be charged to pay creditors.
Will I lose my job if I declare bankruptcy?
If you’re self-employed or hold a normal job, you need not worry. However, some professionals, such as chartered accountants and lawyers, cannot continue practice if they are bankrupt. Directors of companies can continue their jobs if allowed by the court of law. Also note that a bankrupt person cannot apply to be recruited by the police force or the army.
Will I have to sell my house?
You may have to sell your house to pay off debts, unless you have other means to do so or a third party has beneficial interest in the said property or if your bankruptcy has been discharged (annulled).
If you share the house with your family, you may get permission to stay for the next one year. After that your property may be put up for sale in order to pay off your creditors.
Is a bankrupt person restricted by the law in terms of financial activities?
Bankruptcy generally lasts for one year but your future income may continue to be charged for three years after declaring bankruptcy. Until an individual is discharged from bankruptcy, they are forbidden from taking a loan of over £500 without informing the lender of their bankrupt status.
Bankrupt persons are also restricted from running a business in a name different from the business linked to their bankruptcy. Additionally, you may not promote, form or manage a company without informing the court. Lastly, bankrupt individuals are not allowed to hold certain public office positions, such as that of an MP (Member of Parliament).
These restrictions apply only until you are discharged from bankruptcy. Your insolvency consultant should be able to advise you on the implications of incurring further debt during your bankruptcy term.
How do I gain more accurate and reliable information regarding the intricacies of personal bankruptcy?
You can get authentic information at this government website. For help with filing bankruptcy, preparing documentation and minimizing negative implications, consult an insolvency expert who can guide you and offer an alternative solution, such as an Individual Voluntary Arrangement (IVA) or a Debt Management Plan (DMP).
The licensed and experienced insolvency practitioners at www.antonybatty.com have been helping corporate and individual clients with insolvency proceedings, business recovery and turnaround. You may contact them at any of their UK offices for advice regarding bankruptcy.
Will my name be published in online and offline newspapers and other publications?
It’s been over a decade since the practice of mentioning the bankruptcy applicant’s name in publications was common. It does not happen these days unless required by a specific situation or circumstance.
As far as paper publications are concerned, except the London Gazette, the bankruptcy notice does not appear anywhere else. This, however, is also the responsibility of the company handling your bankruptcy procedures. You need not worry about online publications, as the only place where your bankruptcy will be mentioned is the Individual Insolvency Register (IIR).