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Avoiding Bankruptcy In The UK
The aim of this article is to guide you along a gentle path through your forest of debt that crucially avoids bankruptcy. Its natural to be afraid when you find out you've more money going out than you have coming in but it’s in your creditors own
interests to accommodate you with a new, sustainable repayment plan. UK debt problems are monumental so lenders are very much used to dealing with people in dire debt.
Avoiding bankruptcy in the UK is something you should definitely go all out to do. Although your debts will be wiped you will lose your bank account, which is a very serious impediment to life in modern society. It’s also very important to remember that access to credit is essential for serious wealth creation and as a bankrupt you will not be able to access credit for at least 6 years after being declared bankrupt so that is the scenario to avoid if at all possible. If you are forced into bankruptcy all of your disposable assets except essentials will be seized and sold to pay your creditors.
The first step should be to write to your creditors immediately you realise that meeting the repayments is going to be a problem. Explain why and make a more realistic repayment proposal. Promise them that as soon as your situation improves you will go back to making the usual repayments. Always offer considerably less than you can actually afford to repay. This will give you a buffer if they insist on something higher.
Impress upon your creditors that you sincerely wish to clear your debt, always be polite. Request that interest on your debt be frozen making it clear that this is the only way in which you can clear the debt. Most will be willing to do this for a trial period. If you can't meet even the reduced repayments then you may be referred to a debt collection company in which case your interest will be frozen anyway.
If you don't do anything about your debt then you'll be served with a default notice that can adversely affect your credit rating. The next step is for the creditor to take you to court, which they don't really want to do because of the inconvenience so they will still be open to negotiation. If they do take you to court then interest will be frozen and the court will allow you a reasonable time to repay at a much-reduced rate. Never miss payments ordered by the court, if you do bailiffs will be sent. In England and Wales an IVA is a more usual alternative to bankruptcy but it could still result in your property being seized. A similar outcome is an administration order, this won't result in your property being seized.
As you will have gathered by now there are many opportunities to avoid bankruptcy, which is a last resort. It’s not in your creditors' interest for you to become bankrupt so you will certainly be offered a mutually viable alternative. Always communicate with your creditors at the earliest possible time and always negotiate.
By John Kirkham
Avoiding bankruptcy in the UK is something you should definitely go all out to do. Although your debts will be wiped you will lose your bank account, which is a very serious impediment to life in modern society. It’s also very important to remember that access to credit is essential for serious wealth creation and as a bankrupt you will not be able to access credit for at least 6 years after being declared bankrupt so that is the scenario to avoid if at all possible. If you are forced into bankruptcy all of your disposable assets except essentials will be seized and sold to pay your creditors.
The first step should be to write to your creditors immediately you realise that meeting the repayments is going to be a problem. Explain why and make a more realistic repayment proposal. Promise them that as soon as your situation improves you will go back to making the usual repayments. Always offer considerably less than you can actually afford to repay. This will give you a buffer if they insist on something higher.
Impress upon your creditors that you sincerely wish to clear your debt, always be polite. Request that interest on your debt be frozen making it clear that this is the only way in which you can clear the debt. Most will be willing to do this for a trial period. If you can't meet even the reduced repayments then you may be referred to a debt collection company in which case your interest will be frozen anyway.
If you don't do anything about your debt then you'll be served with a default notice that can adversely affect your credit rating. The next step is for the creditor to take you to court, which they don't really want to do because of the inconvenience so they will still be open to negotiation. If they do take you to court then interest will be frozen and the court will allow you a reasonable time to repay at a much-reduced rate. Never miss payments ordered by the court, if you do bailiffs will be sent. In England and Wales an IVA is a more usual alternative to bankruptcy but it could still result in your property being seized. A similar outcome is an administration order, this won't result in your property being seized.
As you will have gathered by now there are many opportunities to avoid bankruptcy, which is a last resort. It’s not in your creditors' interest for you to become bankrupt so you will certainly be offered a mutually viable alternative. Always communicate with your creditors at the earliest possible time and always negotiate.
By John Kirkham
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