What is Bankruptcy?

Here is a useful guide to bankruptcy. It should be noted that bankruptcy is not to be entered into without first having sought professional advice.

Bankruptcy is seen as the last resort. Bankruptcy is perceived to be the only way to escape the ever-constant demands for payment by bill collectors and credit companies alike.

Bankruptcy is not something that should be rushed in to. Certainly there are times when it can be very useful, but there are other times when declaring bankruptcy would be a big mistake.

The purpose of bankruptcy is to convert your possessions, and any wages you receive, into lump sum and instalment payments for creditors. A debtors purpose to apply for their own bankruptcy is to form a moratorium (a group of creditors) to agree part repayment of all outstanding debts, and when the agreed repayment has been met, to have a 'clean slate'.

The constraints which are put upon you once you are declared bankrupt make it only a viable option in the most extreme of cases. It is more likely that an Individual Voluntary Arrangement will be the answer to severe debt problems, since it provides much of the relief offered by bankruptcy but without the severe constraints which bankruptcy imposes.

Individual creditors cannot take action against you. They must make a claim through the 'trustee' (the name of the person who controls a bankruptcy) or write off their debt.

When appointed the trustee will advertise your demise in a number of newspapers to give all of your creditors a chance to make a claim against the bankruptcy.

It is also the responsibility of the bankrupt to make an honest list of all creditors: as a bankruptcy is also a chance to start again the bankrupt should ensure every creditor is notified. Not that a creditor could make a claim against you after a bankruptcy, but it will get all your creditors of your back.

A bankruptcy order takes precedence over all other forms of debt recovery. All creditors have the right to be included in the list of creditors, and benefit from any payment arrangement.

If you own your home you would be fortunate to keep it. You can keep household 'essentials' such as, bed, fridge, heating appliances but not, TV's, video recorders, computers - unless used for work, or used to get work.

All 'tools of trade' are protected, but will be scrutinized.

A bankruptcy will normally last until the third anniversary of the bankruptcy order. During this time you are not allowed to hold a public office, become a company director (or in all but name run a business) and you must not apply for credit over £250 without notifying the lender of your bankruptcy.

Your credit file will show your bankruptcy for six years from the bankruptcy order.

You may freely reprint this article provided the author's biography remains intact:

About The Author

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

---

Credit Card Debt Freedom is Possible

Credit card debt have you drowning financially? You're not alone.... Read More

The Debt Free Lifestyle

Many people have been taught that you cannot get ahead... Read More

Deal with All Your Debts with Care!

Lots of people take a large ammount of loans and... Read More

The Bankruptcy Code Acknowledges the Validity of the Homestead Exemption

Many times the subject of bankruptcy seems baffling in its... Read More

Assess Your Financial Attitude and Eliminate Your Debt Forever

Want to know if your attitude towards your finances is... Read More

Should You Invest In Savings Or Payoff Your Debts?

I have faced this financial question 8 years ago and... Read More

Use A Debt Checklist To Examine Where You Are

A Debt Checklist allows you to look at items and... Read More

Bankruptcy Abuse

Bankruptcy is little more than a smack on the hand... Read More

Bankruptcy As An Option

If your financial worries are preventing you from sleeping at... Read More

IVA Advice

An IVA (individual voluntary arrangement) is an alternative to bankruptcy... Read More

Senate Passes New Bankruptcy Law

The United States Senate passed a law on March 10,... Read More

Fast Track Out of Debt

You go to the mail box and scan - a... Read More

The 5 Secrets to Getting Out of Debt Fast

As they stare down at a teetering pile of bills,... Read More

Free Quick and Easy Money Saving Tips ? Part 1

With the high cost of gasoline and the amount of... Read More

Debt and Financial Optimism in the UK Continue

With £1.3 trillion pounds worth of debt in the UK,... Read More

Tips To Take Control Of Debt Collection

Yes, debt collection tips can help. You may think you... Read More

IVA Information

If you're thinking about an IVA, it is essential to... Read More

How Do I Lower My Debt Burdens?

How do I lower my debts?There are several ways of... Read More

Debt Settlement -- Why the Critics Are Wrong

After October 17, 2005, a lot of people are going... Read More

Should You Join a CCCS - Consumer Credit Counseling Service for Debt Relief and Financial Freedom?

Do You Need to Join a CCCS - Consumer Credit... Read More

Credit Counseling ? Signs That You May Need Help

Credit counseling is a viable option for those who are... Read More

What is Debt Settlement?

Debt settlement is the process of negotiating with your creditors... Read More

Is Debt Negotiation Bad?

Educating yourself about the ins and outs of debt negotiation... Read More

Budget the Luxuries First!

Strictly speaking, his advice was preceded by another Heinlein maxim... Read More

What Are The Benefits and Consequences Of Getting Rid Of Debt The Easy Way

We have all experienced getting so far in debt we... Read More

Utah, the Nation?s Bankruptcy Capital

Congress recently passed the Bankruptcy Abuse Prevention and Consumer Protection... Read More

How to Choose a Debt Settlement Company

As consumer debt continues to spiral out of control, debt... Read More

What is Bankruptcy?

Here is a useful guide to bankruptcy. It should be... Read More

Debt Relief with this Simple Formula

Is there a way to get out of debt without... Read More

Bank Like a Banker

The business of banking has changed dramatically over the last... Read More

Credit Card Debt & the Unfairness of the Universal Default Clause

Let's look at a real world example: A woman purchased... Read More

Personal Bankruptcy ? If Its Unavoidable, File Now

The Bankruptcy Abuse and Consumer Protection Act, signed into law... Read More

What You Should Know About Bankruptcy

Filing bankruptcy is not only a last resort legal action;... Read More