Why Bankruptcy Will Be The Best Solution For Many In 2012...posted on 23 January 2012 | posted in General Category | ( 0 ) CommentsPeople may frown upon the word "Bankruptcy" but these days it is seen as a very useful and practical debt solution. With more and more people set to struggle with debt in 2012, the focus on debt solutions has shifted to bankruptcy, as people realise thats its not all about doom and gloom. Many people in debt now realise that IVAs (Individual Voluntary Arrangements) are not the way forward due to the very high fees and conditions related to these. People are now wise to the fact that in 99% of IVA cases, no money paid into the IVA in the first two years goes back to their creditors. Also people are more aware of the year 4 clause in an IVA if your a homeowner which could mean them having to re-mortgage their home just to suit the IVA Company. Add to this the continuous increase in monthly repayments to the arrangment, and you now can see why they fail so often... A good thing is the proposed changes to personal bankruptcy by the government, mean that people in the near future will not have to go to court to be made bankrupt. This could come into affect as earlier as April 2012 as the Insolvency Service is already factoring this in. With raising concern about people being given the wrong debt advice and debt solution, we explain below what bankruptcy is really all about. So when is bankruptcy a good option? It may be that you entered into an IVA (individual voluntary arrangement) agreeing the fee's set out by the IVA Company and the repayment plan, but over time you found that you could not aford the repayments because they left you with little or no monies to live on. The IVA fails and you petiton for your own bankruptcy. Or you may have been in a Debt Management Plan but because of the amount of debt you owe it would take years and years to pay back. By going bankrupt yopu would clear the debt and have a second chance. Or you may own a home with lots of negative equity, you may have a secured loan that is taking its toll because you cannot afford to stop paying it as a charge may be listed against the property if you don't. Repaying credit cards and loans as well as providing for your family is a struggle and your income is not as high as you wish it to be. You have mounting unsecured debts and the DWP have just told you that they overpaid you and now you have to pay it back which only adds to your debts. You go bankrupt the debts are cleared the house is in negative equity and you maintain your mortgage and secured loan payments. You may have to pay an IPA (Income Payment Arrangement) back to the official receiver or trustee if you have spare monies, but the pressure of debt is gone and you can start again. Those are just three examples but there are many more reasons why bankruptcy is a good option for people, so what is bankruptcy and what are the advantages and disadvantages? How It Works You can petition for your own bankruptcy. Your financial affairs will be dealt with by the official receiver. Valuable assets are usually sold to pay your creditors depending on what they are and the value. Your bankruptcy usually lasts one year but you may have to make payments for three years (IPA) if you have spare monies. If you have no assets the debts are written off. Bankruptcy may be a good option particularly where your rent your home and have no assets or you have negative equity. Although you still can go bankrupt if you have equity in your home it does not necessarily mean that you will lose it. Advantages It relieves stress and anxiety. It allows you to make a fresh start after a year. Your debts are written off if you have no assets. Creditors cannot take further action against you unless the debts are secured on your home. Monthly payments for a maximum of three years if you receive an IPA. These are normally far less than what you would pay back in an IVA. You may be able to avoid selling your home if your partner or a relative can buy out your share of its value if it has equity or you make an arrangement to pay back the equity difference over a period of time with the receiver. Disadvantages This will affect your credit rating.Bankruptcy will stay on your credit file for 6 years. If you have equity you could lose your home if you or someone else cannot pay it back. Secured creditors can still take action against you depending on track records on repayments. You have to find a fee and deposit totalling £700, this is the court fee for going bankrupt by law. Your assets may be sold by the official receiver depneding on what they are and their value. Your employment may be affected but only in certain types of employment, for example the police. Your business may be closed down. Details of your bankruptcy will be held on the public Individual Insolvency Register and published in the London Gazette. You may have a 'bankruptcy restriction order" made against you for dishonesty or 'unfit conduct'. There are some powers for the official receiver to take criminal action against you e.g. if you have committed fraud. You may feel humiliated by the 'stigma" of bankruptcy but you will have support from us after the bankruptcy. If you feel that your debts are mounting up and you want to know more about becoming bankrupt, please contact us for fair, impartial, independent and professional advice on 01743 272900. (Author:Darren Perks) Share this blog entry:
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