Bankruptcy

Bankruptcy might be the most appropriate method of dealing with your debts if you have little hope of repaying them in a reasonable time. 

Bankruptcy is a type of insolvency suitable for people with significant debts they cannot repay in a reasonable timeframe. It involves a legal process that writes off all your existing unsecured debts to give you a fresh financial start. 

Bankruptcy can be done voluntary or it might be forced on you by your creditors. Bankruptcy can be the best course of action for some debtors, but it should never be a decision taken lightly. Bankruptcy has serious consequences on your future that you need to be made aware of. 

The pros

• All your unsecured debts are written off to give you a new start
• No further action can be taken by creditors to recover the money owed
• Creditors should never contact you again regarding the debt

The cons

• Assets can be seized as part of your bankruptcy, including property and vehicles
• You might not be able to continue working in some legal and finance professions (if applicable)
• Bankruptcy is visible on your credit file for six years and has detrimental consequences
• Bankruptcy is also recorded on a public register

More information on Bankruptcy

There certainly is a lot to consider when thinking about using bankruptcy to clear unsecured debts. It may or may not be the right move for you, but the best way to know is to learn more about bankruptcy and receive insolvency advice from a professional. MoneyNerd can help you with the former. With scores of bankruptcy articles on our books, we’re here to help!