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There are many individuals today that may feel that bankruptcy will be the solution to their financial problems. For those with large debts, it could be a viable solution if there is no other way of settling the debt. However in many cases this option should be viewed as the last resort.
When an individual becomes bankrupt there are severe restrictions placed against that person, for example:
- Acting as director of a company, starting, managing or promoting a company without the permission of the courts.
- Continuing to run a business in a different name from that for which the bankruptcy was made without informing all associates doing business with you.
- Obtaining credit of more than £250.00 or more without disclosing the status of your bankruptcy.
When an individual has become bankrupt, it means that the individual has become insolvent.
Insolvency occurs when a person’s liabilities exceed his assets or when a person cannot meet his financial obligations when they fall due.
Insolvency arises when an order is made under the Insolvency act 1986 or the Bankruptcy Act 1985 (In Scotland).
When the court is satisfied that there is absolutely no hope of the debt being repaid, a bankruptcy order is issued on the petition of the debtor or one or more of his creditors. It is not commonly known that a person can be made bankrupt for owing just £750 and failing to pay this within in a reasonable period.
The official receiver investigates the financial affairs of the debtor for the period before bankruptcy and is appointed to act as a trustee from the date of the bankruptcy order until a trustee takes control.
The Enterprise Act 2002
Under the Enterprise Act of 2002, once made, a bankruptcy order remains in force for 12 months in most circumstances. The act has now reduced the discharge period that was previously three years, to a maximum of 12 months for all individuals declared bankrupt after 1st April 2004. In some cases this period could be shorter. During this discharge period, the person subject to the order is said to be an undischarged bankrupt. In this time a bankrupt may not borrow money other than nominal amounts.
Upon the bankruptcy, all banks will be informed of the insolvency, bank accounts will be closed, all future assets lost and all hire purchase items will be returned. However, the individual will then be debt free and any creditors may not make contact. The ability to obtain future credit, a mortgage or even a bank account in the future will be considerably harder to achieve. In this way, bankruptcy should be seen as the last resort.
Once discharged from bankruptcy, the individual is free to seek credit although, whether the lender will be prepared to lend is another matter. The existence of a previous bankruptcy must be declared by law and failure to do so can render the individual guilty of fraud. Often this information will be highlighted on a credit search.
Related Link: No Credit Check Loans
When an individual becomes bankrupt there are severe restrictions placed against that person, for example:
- Acting as director of a company, starting, managing or promoting a company without the permission of the courts.
- Continuing to run a business in a different name from that for which the bankruptcy was made without informing all associates doing business with you.
- Obtaining credit of more than £250.00 or more without disclosing the status of your bankruptcy.
When an individual has become bankrupt, it means that the individual has become insolvent.
Insolvency occurs when a person’s liabilities exceed his assets or when a person cannot meet his financial obligations when they fall due.
Insolvency arises when an order is made under the Insolvency act 1986 or the Bankruptcy Act 1985 (In Scotland).
When the court is satisfied that there is absolutely no hope of the debt being repaid, a bankruptcy order is issued on the petition of the debtor or one or more of his creditors. It is not commonly known that a person can be made bankrupt for owing just £750 and failing to pay this within in a reasonable period.
The official receiver investigates the financial affairs of the debtor for the period before bankruptcy and is appointed to act as a trustee from the date of the bankruptcy order until a trustee takes control.
The Enterprise Act 2002
Under the Enterprise Act of 2002, once made, a bankruptcy order remains in force for 12 months in most circumstances. The act has now reduced the discharge period that was previously three years, to a maximum of 12 months for all individuals declared bankrupt after 1st April 2004. In some cases this period could be shorter. During this discharge period, the person subject to the order is said to be an undischarged bankrupt. In this time a bankrupt may not borrow money other than nominal amounts.
Upon the bankruptcy, all banks will be informed of the insolvency, bank accounts will be closed, all future assets lost and all hire purchase items will be returned. However, the individual will then be debt free and any creditors may not make contact. The ability to obtain future credit, a mortgage or even a bank account in the future will be considerably harder to achieve. In this way, bankruptcy should be seen as the last resort.
Once discharged from bankruptcy, the individual is free to seek credit although, whether the lender will be prepared to lend is another matter. The existence of a previous bankruptcy must be declared by law and failure to do so can render the individual guilty of fraud. Often this information will be highlighted on a credit search.
Related Link: No Credit Check Loans
