Is bankruptcy right for me?
Bankruptcy can be the right debt solution for certain people. It can help you clear your debts in just 12 months, meaning you can focus on getting your life back under control.
But bankruptcy can have some negative effects on you too. Let’s take a look at the consequences of bankruptcy on your life and your finances.
Bankruptcy – the consequences
- It can have a negative effect on your credit score for up to six years after you have been declared bankrupt. This means that if apply for credit at any point while the bankruptcy appears on your credit report, some lenders might be more likely to reject you or accept you at a higher interest rate. And even after this, some lenders might ask you if you’ve ever been bankrupt.
- You might have to sell some of your assets and pay the money into your bankruptcy. This will exclude any items you need for work purposes – so if you’re a builder, you’ll still be able to keep your tools. But depending on your own individual set of circumstances, it can include your home, your car and other high value items.
- If you get any extra money or assets before your bankruptcy is over, you may have to pay this to your creditors.
- Details of your bankruptcy will be published on the Individual Insolvency Register. This is a publically accessible register so it’s technically possible that someone could find out about your bankruptcy by searching on this. But it’s not really the kind of thing that members of the public would search – it’s more for creditors and credit reference agencies.
- You may have to make payments to creditors for up to three years. You’ll only have to do this if you can afford it after you’ve paid all of your essential bills and other expenses.
- If you borrow above £500, you have to tell the lender about your bankruptcy. This could mean you’re more likely to get turned down for borrowing.
- You may not be able to do certain jobs if you’ve been bankrupt. These include being a solicitor, an accountant and some other jobs where you’re a member of a professional body. Check with a trade union representative or someone from your HR department to see if bankruptcy would affect your work.