What Are The Pros/Cons Of Bankruptcy
Bankruptcy. We’ve all heard of it and we fear it like the plague. Bankruptcy seems to be a last resort for people who have lost control of their finances. But what does it really mean to go bankrupt? What implications does it have on the daily life of a citizen in the United Kingdom? What are the positive and negative aspects of filing for bankruptcy in the United Kingdom?
Bankruptcy is a serious decision to make. Be sure to weigh up the pros and cons before committing
Bankruptcy is similar to insolvency, which is the inability to pay ones debts as they fall due. Bankruptcy only applies to individuals and not to companies or corporations. There is a low instance of bankruptcy in the United Kingdom, but it does happen. One of the reasons the bankruptcy statistics are so low is because bankruptcy has a hugely negative impact on the credit rating of those who file for it. And the people know it. Not only is bankruptcy an ineffective way of dealing with debt, it also hurts the United Kingdom because the debts are sometimes “forgiven”. In some cases though, the debts are not forgiven. The courts of the United Kingdom dictate a new court supervised payment plan for the debtor.
Pros
- Peace of mind and an end to the madness of being in debt
- Possible forgiveness of debt and a chance at a new start
- Can ensure you are no longer chased for debt, as you are declared bankrupt
Cons
- Some people in certain lines of work will be forbidden from practicing their profession, never again allowed to practice in the field. Example: Accountants
- Obtaining any line of credit is a major problem and in some cases impossible. Lenders may require authorization for anything over £250.
- Mortgages after this point are extremely difficult
- All forms of unsecured loans are forbidden.
- Secured loans will carry exorbitantly high rates of interest – Too high for most people to look at as a valid option
Both newspapers and court records will display your name as being officially bankrupt - All of your financial operations will be then be under the full investigation of the law. Any discrepancies hold severe penalties, even prison time.
So you see, bankruptcy may be a valid last resort, but it’s the “end of the road” for people trying to create a financially secure life for themselves. While it doesn’t destroy your chances entirely, it certainly affects any possibility that you could conduct business in a traditional way. Basically, when you declare bankruptcy in the UK, you are putting the message out to all financial entities that you are not a worthy debtor. You’re saying that you don’t pay back your debts and let things get to the point where the government has to step in.Doing everything in your power to stay away from the dangers of bankruptcy is the best thing you can do as a citizen of the United Kingdom.
It never seems to simply forgive your debts, you have to carry the burden of never being able to secure a mortgage loan, you’ll never get an unsecured loan again, and any form of a secured loan you get will have very high interest rates. Basically, bankruptcy is equal to never being able to get an affordable loan again. Consider this before you ever even consider the potentially destructive option of bankruptcy.
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