Figures from Credit Action have shown that, currently, one person is declaring bankruptcy every 3.97 minutes in the UK – that’s 362 people a day admitting defeat, throwing in the financial towel and seeking ways to write off debt. Experts predict that number will rise to 411 people a day over the coming financial year.
Bankruptcy is the end of the line for many people financially. It means that your finances are taken out of your hands and put under the control of the courts. It means you cannot run a business and it will most definitely affect your credit rating for years to come. Insolvency is not an easy option and it pays to consider all the other alternatives such as unsecured debt consolidation or an IVA debt solution before you resort to bankruptcy.
But sometimes, wiping the slate clean and starting again can seem like a tempting option. The stigma of bankruptcy is no longer a cause to hang your head in shame – after all, according to the statistics you are most certainly not alone. But for those in serious financial trouble and in need of urgent debt help, drawing a line in the sand and starting afresh, despite the problems it may cause later on, can seem like the best option.
Before you go down the bankruptcy route, there are other steps you can take to try to stay in control of your finances. The first is obviously to get impartial debt advice, make a financial plan and talk to your creditors. You may be able to arrange an IVA, which is a five-year agreement in which you pay a percentage of the outstanding debts back to your creditors. At the end of five years, you are debt free and do not have the credit stigma of bankruptcy on your record. But if you’ve tried everything and are still in a mess with your finances, bankruptcy may be your only remaining option. In any case, you need to talk things through with an debt management expert to decide the next move. If that move is declaring bankruptcy, they will be able to give you all the information you need to make a fresh start.