Why File For Bankruptcy?

By Author: Elliott Parker
Total Articles: 3764
Comment this article

I was having trouble with my debts for many years before I really did anything about it. I was in a position to keep extending my credit allowance, or obtain a new loan and I regularly received letters from lenders offering me more finance options.

Eventually it all caught up with me and I found that not only was I unable to get anymore credit, but now I couldn't keep up with any repayments. I found my creditors to be relentless and completely unsympathetic to the situation I was in, and it's not like I was surprised; after all I did borrow the money. The flipside to this is that even though I did borrow the money, I also feel that I was a victim to irresponsible lending. In the beginning the finance I borrowed went towards normal living expenses, but it was the interest rates that drove me to using credit to pay off other credit.

It seemed like there was no way out. I was being threatened with court action and bailiffs had already turned up at my property and clamped my car. Bailiffs regularly turned up at my house demanding payments of around £300, otherwise they would be bringing someone else round to help ...
... take my belongings. The anxiety and stress I went through at this time was unbearable and I found myself sinking into an awful depression.

Someone mentioned an IVA to me, and I got in touch with a company that provided this service, but I couldn't afford the repayments. They wanted £250 a month for the next 5 years! After some more research I discovered that an IVA is a form of insolvency - much like bankruptcy.
The basic difference between them is that in an IVA you protect your assets and career, and in bankruptcy any expensive assets are seized and your occupation may be affected.

Now I don't own my own home, I just rent, so I didn't have to worry about anyone throwing me onto the streets. My car was worth £1500 and I needed it to get to work so I didn't want that taken away from me; however I found out that as long as your vehicle is worth £2,500 or less and you genuinely require it to get to work, or for the kids etc then it won't be taken from you.

This was great! Now the only other thing I needed to check was that my job wasn't going to be affected. I make my living as a web site designer and found that my occupation isn't affected at all. In fact, the only occupations that are affected are: Charted Accountant / Lawyer, Estate Agents, company director, Insolvency Practitioner, Pub Licensee, member of the local authority. Any other occupations are fine, but it is best to check with your employment contract if your job requires you to handle money for clients or something of that nature.

So I didn't risk losing any assets and my occupation was unaffected by bankruptcy. By going bankrupt all court action threats and bailiffs would cease and I would no longer be responsible for any of the debt I had incurred over the years. It sounded to good to be true and even after I left the court and was declared bankrupt it still hadn't settled in.
At least now I can say that I have certainly learnt a valuable lesson when it comes to finance and handling debt and I am extremely happy to be given a fresh start and a chance to rebuild my credit rating again.

I will be automatically discharged from bankruptcy after 12 months and the only restrictions placed on me are that I must inform the lender that I'm bankrupt if I try to borrow £500 or more, and I cannot act as a company director. After the 12 months are up the restrictions are lifted!

I would encourage all of you with debt problems to seriously consider bankruptcy as an option. Of course the government and the creditors don't want you to go bankrupt (especially if you haven't got any assets to protect like me!) because they won't make any money out of you - but in an age where even MPs take advantage of loopholes for second homes, or corporations are bailed out by the tax payer, we don't have to endure the stress, anxiety, fear and depression that comes with mounting debt! You can clear all of your debt now and take positive action!