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Bankruptcy in UK
UK Government's liberalization of the UK bankruptcy regime has increased the number of bankruptcy cases more than ever. Debtors view bankruptcy as a legalized way of getting rid of their unbearable debts, and Creditors file bankruptcy against a debtor as a measure to recoup a part of the sum they are owed. Earlier when bankruptcy was first introduced in 1542, it was planned as a remedy to the creditors and not the debtors. The law remained favorable to the creditors until it was amended in eighteen hundreds. This article briefs both the positive and negative aspects of filing bankruptcy in UK.
Today in most cases a voluntary bankruptcy is filed by the debtors to get rid of their burdensome debts in a legal way. A bankruptcy in UK today lasts no longer than 12 months and at times even less. Debtors can retain their occupational pension during their bankruptcy period as well. The modern insolvency legislation and business debt restructuring today no longer focuses on eliminating the insolvent entities but strives to remodel their financial and organizational structure to rehabilitate help them continue their businesses.
By declaring bankruptcy the debtor informs his inability to repay his debts because of his current situation. This not only frees the person from his debts, but also provides him with an opportunity to start afresh. The person filing bankruptcy has to make it clear to the court that he has no other way of repaying his debts and that his income is not likely to improve in the future. By doing so, he can stop the accumulation of interests and settle the entire loan amount with a sum that is much lesser than loan amount to go debt free.
The procedure for filing bankruptcy should follow the bankruptcy law of UK. It is important that the debtor hire a bankruptcy lawyer to assist him with the procedures and represent him in the court. The court ensures that the process is beneficial to both the parties. Although filing bankruptcy seems to be the best option to get rid of massive debts, there are several disadvantages, which is why many financial experts advice bankruptcy as the final option.
There are several disadvantages associated with bankruptcy and some of them as in case of individuals are briefed here. First of all the person will have to surrender all the property he owns so that it can be sold to pay of the lenders however, it is not necessary to provide basic household items or clothes. Some of the most prominent social and personal problems faced upon declaring bankruptcy include accommodation issues, problems in career development, and devastatingly negative financial impacts. It can be a financially difficult time if you are going through bankruptcy, or you have recently been discharged. There are bank accounts for bankrupts available in the UK though thinkbanking offer this type of bank account.
When the debts accumulate beyond your repaying capacity, it is wise to consult a financial expert for possible solutions. There several ways, such as DRO, IVA and the like through which your financial experts will negotiate the amount repayable with your creditors. Buy opting for such amicable debt clearance solutions, you can repair your credit score easily and regain you normalcy within a short period. You can also retain your social status since IVA proceedings are not publicized in local newspapers as in case of bankruptcy.
However, opting for bankruptcy would relieve you from the financial burdens but diminish the chances of your quick rejuvenation. Usually the impact of bankruptcy lasts for longer than it is thought. Although there are institutions that offer financial assistance for people with bankruptcy record the interest rates are very high. While bankruptcy might workout well for non-secured debts, creditors that issue secured loans have every right to claim their full amount with interest by selling the asset via auction even after declaration of bankruptcy.
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