Bankruptcy is a very viable solution for debtors with financial obligations that are seemingly too high to ever be paid in full. However, before filing for bankruptcy it is important to be fully aware of its advantages, its disadvantages, and the consequences it may have on every aspect of your financial future.

Bankruptcy offers a fresh start, where one can wipe the slate clean and start over, but it is not something to take lightly. It should be seriously studied before being embarked upon.

Disappointment is a sort of bankruptcy – the bankruptcy of a soul that expends too much in hope and expectation.

~ Eric Hoffer

The biggest advantage of Bankruptcy is that most debt is written off, and you get a fresh financial start after just one year. Bankruptcy puts an immediate

halt to most liabilities relating to credit card debts, civil judgments, past-due accounts and judgments due to repossessions and foreclosures. It prohibits creditors with notice of the bankruptcy case from contacting you to seek collection of a debt. In addition, you may be able to keep all or most of your property and certain liens and certain involuntary transfer (such as wage garnishments) may be avoided if timely action is taken. If you are self employed, you are allowed to keep basic possessions and the tools of your trade. You can still operate a bank account, and are allowed a reasonable amount to live on

You cannot be fired from your job on the sole basis that you have filed for bankruptcy. To find out how bankruptcy could affect your career, read the article ‘How bankruptcy affects your job and career’.

Most cases are automatically discharged from bankruptcy after one year. After the discharge, your debts will no longer appear on your credit report, which gives you the opportunity to begin rebuilding your credit.

Bankruptcy remains a very viable solution for many people who are in dire financial straits. However, it is not without its implications and consequences. Whether they are significant or not for you will depend on your specific situation. This is why it is so important to take proper advice from a bankruptcy specialist before taking any steps.

The main disadvantages with bankruptcy include the following:

It will ruin your credit and remain on your credit history for at least 6-10 years.

• Your financial affairs will be investigated and subject to public scrutiny.
• You cannot be a company director during the bankruptcy period of one year. If you own a business, it may be sold.
• If you own expensive assets, they can be seized and sold to help pay off your debts. However, the law does protect certain types of assets from being taken. The type of exempt assets will vary but typically includes motor vehicles up to a certain value, clothing and household furnishings, life insurance and portions of earned wages.
• You will have to destroy all of your credit cards.
• Certain debts cannot be written off. These include court fines, student loans, alimony and child support orders. If a large portion of your debt is non-dischargeable, it may not make sense for you to file for bankruptcy.
• In the UK, you are not allowed to obtain credit over £500 without disclosing your bankruptcy.
• Your career aspirations can be significantly impaired.
• If you belong to certain professions including but not limited to the police, judiciary and certain financial positions, you may lose your job, depending on the terms of your contract.
• The fact of your bankruptcy, name, address and occupation is published in local media.
• You have to inform the official receiver of any windfalls such as inheritance or lottery money which are usually taken.
• Any Bankruptcy Restriction Order will be registered.

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