What Are the Consequences of Bankruptcies?
If you’re struggling financially, declaring bankruptcy could provide you with the fresh financial start you desperately need.
Bankruptcy can wipe out major debts, clear liabilities and protect you from any further action from creditors. But you could also lose your house, your car and any other high-value assets in your possession.
There are positives and negatives to consider when declaring bankruptcy. In this article, the team at Irwin Insolvency explores the consequences of bankruptcies, to help you decide if it’s the best course of action for you.
The Major Consequences of Bankruptcies
Bankruptcy is an important personal insolvency tool. Bankruptcy lasts for 12 months, after which major debts are wiped out and you’re given the opportunity for a fresh financial start. There are many more consequences to consider before declaring yourself bankrupt however, and bankruptcy can continue to affect your life for years to come.
The major consequences of bankruptcies, both positive and negative, include:
- Major debts and liabilities are written off after 12 months.
- Creditors are no longer allowed to chase you for outstanding payments.
- You lose control of your bank accounts and finances for 12 months.
- Your house, property, company and high-value assets like cars can all be sold to pay your debts.
- You may lose your family home, and if you’re renting your landlord may evict you if you fail to make rent payments.
- You may continue making income payment orders based on your earnings for two years after discharge.
- Not all personal liabilities are wiped out, including student loans, fines and child support payments.
- Bankruptcy remains on your credit score for six years.
- You will find it difficult to secure credit in the future, and will have to answer truthfully if ever asked by a lender if you’ve declared bankruptcy.
- Bankruptcy is public knowledge and, consequently, you may lose the right to holding certain positions in society, such as being a MP or practising law.
Are All Debts Wiped Out by Bankruptcy?
Importantly, not all debts are wiped out by bankruptcy. Major debts and liabilities that are cleared after your 12-month bankruptcy period ends include:
- Personal loans (secured and unsecured)
- Personal guarantees
- Mortgages (you will lose your house)
- Car loans (you will lose your vehicle)
- Rent (you will lose your home)
- Credit card bills
- Utility bills
Debts and liabilities that are not wiped out after bankruptcy include:
- Student loans
- Child support payments
- Court issued fines
- TV licence arrears
- Fraudulent debts
The consequences of bankruptcy can be severe, although at the end of the process you have the opportunity to start over again.
Contact Irwin Insolvency Today to Find Out More About the Consequences of Bankruptcies
Declaring bankruptcy may result in large debts being wiped out, and the opportunity for a fresh financial start. You could also lose your home, and your personal and financial life will be affected for years to come.
If you’re considering declaring bankruptcy, Irwin Insolvency’s expert team of personal financial advisors are here to help. Contact Irwin Insolvency today for more information.