UK Government has formulated bankruptcy laws to the people who have taken debts but
are not able to resolve the debts in stipulated time, or file petitions in the court during inability to pay off the debts. In simple words bankruptcy is a legal way of declaration of inability to pay debts taken by a debtor. A debtor takes this step to obtain debt free life. There are two types of bankruptcy laws. One is chapter 7 that is called Liquidation or Straight bankruptcy. The other is Chapter 13 called Repayment.
There are many ways government offers debtors to pay off their debts. The debtor can pay off debts through the division of his assets or property to the creditors. There are lots of bankruptcies actions which allow (after appointment of a trustee) a debtor to continue with his current business and use the earnings just to resolve his loans. The main purpose of these bankruptcy laws is to make debtors life debt free from these financial compulsions.
Permission to use future income as remedy to pay off debts is allowed under chapter 11, 12 13, and chapter 11 can be considered as a Reformation Law as debtors are allowed to continue their work, while paying their debts.
However new bankruptcy law has made strict amendments. Chapter 7 also makes it harder for the debtors to get lawyers who can defend them. Lawyers will be harder to get and also expensive. The new policy also requires the debtors to get counseling before they can file a petition.
It is recommended that debtor should go in for a debt settlement and must make use of debt settlement experts to negotiate with lenders. All in all bankruptcy is something you should not opt until or unless you have no other alternative left.