My debts have become unmanageable, will I face bankruptcy?
February 15, 2013
Accountancy firm PKF predicts that almost 400 people in Scotland will go bankrupt every week this year. It has calculated that over 2012 and 2013, about 20,000 Scots will have been sequestrated or have taken out a Protected Trust Deed because of their debts. Scotland has a personal insolvency rate almost twice that of the rest of the UK.
So if you feel as though your debts are spiralling out of control, you are certainly not alone. Before making any hasty decisions about the future though, it’s best to assess all your options so that you can make the best of your current financial situation.
Personal bankruptcy, or sequestration as it has been called in Scotland since 2008, is a method which enables you to clear your debt, but is only considered helpful in certain situations and must never be viewed as an easy way out.
Bankruptcy is a debt solution provided by law for people who are no longer able to pay their debts. If you have a considerable debt problem and limited assets, it could be for you. But if you have assets you want to keep, and equity in your home, bankruptcy is something to be carefully considered as they can be affected, along with employment, business and personal relationships.
There are two ways in which bankruptcy can occur. Either you can voluntarily apply to the court to file for bankruptcy, or your creditors can issue a bankruptcy order against you.
If you voluntarily file for bankruptcy, your creditors will no longer be able to recover any debt directly from you, and you can be more involved in justifying which assets you should keep (e.g. if your job requires you to have a car), along with any personal information provided on paperwork such as income and expenditure. However, this method is subject to certain conditions and so it is important to always get professional advice before attempting to file for voluntary bankruptcy, and to check whether you’re eligible.
Though this may seem like the only way out, it should only ever be considered as a last resort, under the guidance of a qualified adviser. Often, in order for your lenders to recover some of the debt owing, assets such as your property or car can be sold to recover the funds. Our experienced team at Scotland Debt Solutions can offer you impartial advice and discuss all the options available to provide you with a solution you are comfortable with.
If after considering all possibilities, bankruptcy is the only alternative; both the benefits and the drawbacks will be immediate. On the positive side, you will no longer face relentless creditors chasing payments, as legally they will no longer be able to contact you, and whilst your case is under assessment, your debt will be temporarily put on hold.
On the other hand, bankruptcy can affect employment opportunities, will affect your ability to obtain credit and will be logged on the Register of Insolvencies, which is a public document, readily available for anyone to view.
Ultimately, the decision as to whether or not to declare bankruptcy is a complex one. It requires serious consideration and must always be discussed with a skilled professional. Call us today to discuss a practical solution to get your finances back in order.
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