By Mr Bankruptcy
2nd May 2019
The thought of bankruptcy is undoubtedly scary for businesspeople but this is often because of the horror stories we hear.
If we could dispel some of the stories surrounding the bankruptcy process more people could begin to think about their options based on facts, not fiction.
Seek specialist bankruptcy advice
To make sure you really understand what bankruptcy means, whether it’s the best option in your circumstances or whether there are others to consider, I always recommend that you speak to an insolvency expert rather than listen to a mate in the pub, which is where many of the scary stories around bankruptcy probably originate.
So here are some common myths that I hear from clients that I’d like to kill off.
• You’ll lose everything. If there are specific “tools of the trade” that you need to continue working or for your business you will usually be able to keep these so that you can continue to earn an income. Neither will you lose those items necessary for a basic living for you and your family. It’s not even necessarily the case that you’ll automatically lose your home or car.
• You can’t work when you’re bankrupt. There may be some limitations put on the type of work you can do but it’s in no one’s interest to prevent you from working as you need income to make repayments, pay rent etc.
• Everyone will know. The public can go to the Insolvency Register website and search for you by name, and announcements will also be made in The Gazette, which is an electronic publication of notices and not the most thrilling read unless you work in a financial institution. It’s not likely the general public will see your face splashed on the front pages unless you’re a tycoon, but there is usually a small ad buried in the local paper.
• I won’t be able to open a bank account. Your bank accounts are usually frozen but you can request access once the bank has talked to the Insolvency Service. You can also open a new Basic Bank Account or a Post Office card account to receive wages but you will have to declare you’re a bankrupt.
• I’ll have to go to court. This can be a daunting prospect but bankruptcies are not normally conducted in an open court. You may need to see a judge (if a creditor is trying to make you bankrupt and you wish to dispute it), who will ensure you understand what you’re doing, but you can now file your bankruptcy online and conduct it through calls (although this may vary depending on your circumstances).
• I’ll lose my home. If there is equity in your home, the Insolvency Service will usually appoint a Trustee in Bankruptcy to make a claim against your share of this this, but it is not the case that you and your family will find yourself on the street as soon as you’re declared bankrupt; alternatives to selling your home will be considered.
• Bankruptcy lasts a long time. Bankruptcy appears on your credit file for 6 years and the bankruptcy is usually automatically discharged after 12 months, but this can depend on circumstances, such as your level of cooperation
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