Bankruptcy- What can happen?
Bankruptcy, the “B” word, is feared by many and has negative connotations associated with it. Sadly, we see many Creditors petitions in Court for borrowers being made Bankrupt by their Lender. Perhaps the stigma surrounding Bankruptcy has been reduced since 2008 due to the increase in numbers filing for Bankruptcy but it is still something that many fear and want to avoid at all costs however It can prove to be a useful tool for borrowers whose debts are so significant that there is no route to negotiate with lenders.
Aggressive Creditor’s Petition? What’s the worst that can happen?
You can be made Bankrupt by your lender. It is a lengthy process for the Creditor and does involve cost but nonetheless many will pursue this route to non- responsive debtors. Throughout the process a Creditor must take action to declare the debtor Bankrupt, the debtor will be given every chance to respond. Amicably liaising with a lender can vastly reduce the chance of you being made Bankrupt and also bring about a positive outcome for all parties involved should this be the best option for you.
Should a Creditors Petition be followed through you could find yourself in increased financial difficulty. You may be called for a meeting in the Official Receivers to discuss your finances and they may decide to implement an Attachment of Earnings Order. If this is put in place funds could be taken directly from your monthly salary and distributed to the relevant Creditors. Furthermore, if made Bankrupt your assets could be in significant danger for example, if you have equity in home this asset is in severe risk. Other matters to consider include vehicles, pensions, life insurance policies etc.
Is there such thing as a ‘best case scenario’ in Bankruptcy?
Providing the Client’s circumstances align, Personal Bankruptcy can “clear the decks” allowing the individual the opportunity to start again. We regularly assist individuals going through Personal Bankruptcy and help to alleviate the pressures involved.
Dependant on your personal situation Bankruptcy may not have a serious effect on your day to day life for example, if your home is in negative equity there may be a a high possibility that you can retain this in Bankruptcy once mortgage payments are maintained. Furthermore, an income payment order may not be applicable if there is an undisputed deficit each month. There is also a possibility that you will retain your vehicle, life insurance and pension.
Regardless of best or worst case scenario, Bell & Company can assist in providing the appropriate advice tailored to the debtor’s personal circumstances with a view to establishing your best case scenario.