I can only comment about this because a relative took this route a number of years back. But, this is his experiance as he told it to me and others may disagree.(posted 8046 days ago)Downside -------- All your bank accounts are closed. Any credit balances go to the reciver. You will find it a bit hard to open a new bank account, if you tell them you are bankrupt. There is nothing to stop a bankrupt person opening or running a bank account. If the application form asks if you are a bankrupt then you are breaking the law if you fail to disclose it. But, most Solo type accounts don't ask the question so its not a problem. If you are silly enough to tell anybody that you are bankrupt then they will know. Otherwise nobody gives a damn. There is a lot of social stigma about going bankrupt, so don't tell anybody. You can't be a company director. You can't be a policeman. You can't be in the armed forces. You can't be a magistrate. Your earnings will assessed, if you have any excess income over expenditure then you have to pay it to the receiver month by month. If you have any spare valuble assets they will be taken by the receiver. This does not include your household possessions, but they will take your cars and boats, and planes, and castles. You will have to have at least one meeting with the receiver. (My relative had a ten minute meeting, then he was told that was it, thanks very much, be sure to tell us if you win the lottery, bye) If you have valuble assets, goods, contracts, a business, then you lose them all. Houses with excess equity are sold. But, if you have children under 16 then this is deferred providing you can make the mortgage payments. The receiver can place an unlimited charge against your house which can be realised anytime in the future that it is worth his while to do so, even after yuo have been discharged from bankruptcy. Banks and building societies dislike ex-bankrupts. This may be because ex-bankrupts know how easy it is to shake off the yoke of financial debt if they need to do so, but I think that banks just don't like ex-bankrupts. If you go bankrupt a 2nd time then it lasts longer, 7 years? And the receiver gives you a rough time the 2nd time.
Upside ------ Your debts all stop dead. It is against the law for your creditors to harass you. You owe nothing to your creditors, but the receiver owns you for three years. After three years you are discharged from bankruptcy. You start your life again. You sleep at nights.
My relative declared himself bankrupt in the late 80's. It cost him a £100 or something. His mother bought the equity in his house for £1,500 to prevent a charge being placed on it. The equity was about £4,000 at that time and his children were aged 4 and six, so they would have charged the house for long term recovery of equity without his mothers intervention. He was asessed as having £35 a week excess income over expenditure so he paid £120 a month to the receiver for three years. Today he runs a business employing ten people and the company has an income of £2M a year. He said to me that going bankrupt was the most sensible thing he ever did. He had business debts of £200,000 and minimal income. By going bankrupt he sorted out his financial problems and started afresh. And he slept at nights.
Best to talk to the CAB, they tend to advise bankruptcy if you owe more than you can hope to ever pay. They can advise,and expand, on all the upside / downside issues.
Everybody has a different set of concerns regarding this. Are you earning, how much do you owe in total, what do you own. You really need to evaluate everything and then come to a decision.
Going bankrupt is a bit of a pain from what I've seen, but its not so bad. There may be long-term concerns because banks don't like ex- bankrupts, but nobody else really cares.
Good Luck.