What to do when you are declared bankrupt
Posted on 22. Dec, 2011 by admin in General
While nobody really wants to consider the possibility of being involved in bankruptcy proceedings, it is something that can potentially happen to anyone. Whether you are running a business or simply your own personal finances, there is always the chance that you will find yourself unable to meet your financial debts. Therefore it is useful to know exactly what happens following bankruptcy and what your options are if you find yourself in that situation.
In the immediate aftermath of being declared bankrupt, you may find your options severely limited. The plus side of being declared bankrupt is that it can release you from the worries and stress being in debt can cause. Most people who have reached this point will have spent lengthy periods attempting to find a resolution to their situation, and bankruptcy will at least allow them to plan for the future. There are downsides to bankruptcy however, in that it restricts your options. Initially you will have your assets frozen and will be unable to either set yourself up in business or secure credit of more than £250. In addition, you may be unable to set up a bank account – some banks will refuse accounts to those who are bankrupt, while others will not. During the terms of the bankruptcy order you will be expected to make attempts to repay money you owe to creditors – and money you earn during this period can be taken in order to pay debts – but you will no longer be obligated to fully repay debts.
After a certain period – usually one year – your bankruptcy order may be discharged. This means that you freed from the obligations and restrictions that the order imposes on you and means that you are free from any debts that you still owe creditors at this point. At this point you will be able to retain assets that you acquire and may set yourself up in business again. However, there is no absolute guarantee that your bankruptcy will be discharged after a year, as the courts have the option of postponing this.