The Dangers of Declaring Yourself Bankrupt

The Dangers of Declaring Yourself Bankrupt

While there are some positives, when the overall picture is looked at, there seems to be many more negatives and dangers involved with this legal process. First of all, it costs substantial amounts of money to file bankruptcy. On top of that, if a person desires to seek more credit while he is bankrupt, that may not be possible, as extending credit to bankrupt people is not a common occurrence by creditors.

A person usually will lose his house especially if he signed a personal note on a failed business against his home. If a person doesn't own a business, depending on which career he is employed in, some of them don't allow the bankrupt individual to go on working in that career as well. Most personal assets and possessions must be sold off. This can include any expensive equipment a business owns or even a bankrupt person's cars and high end items such as antiques and art work.

Most every time a bankruptcy occurs, the Official Receiver must auction off all of a business's assets as well as most likely close it down so even though the person does not have to pay certain debts to specific creditors under a bankruptcy proceeding, he can still obviously lose a lot. Moreover, if a person is an immigrant, often declaring bankruptcy can change his situation as a legalized immigrant. Most bankruptcies in the UK are not held private like in other countries.

Most of the time they'll be listed in major newspapers where anyone can openly view just what happened to the bankrupt individual. This can cause great embarrassment and sadness at the very least, not to mention the associated stigma of being publicly humiliated, and there's really nothing the bankrupt person can legally do about this. Also, a person will have his credit rating nearly destroyed for many years, usually up to six or seven in most business bankruptcies.

Even with a comprehensive bankruptcy, there are some creditors that can't be erased or wiped out. These include items such as school loans and court ordered fines as well. A bankruptcy can also affect a person's capacity to ever run a business again using the same business name. Many people who go bankrupt have their employers quickly find out about it because it's so public in the UK and that can make the employer look negatively on the employee and he can even have him terminated.

Therefore, If a business or a person is in a huge amount of debt, he or his financial adviser might suggest that he go bankrupt. But even if his financial adviser recommends this, it might not really be the best way out that it can at first seem to be due to the many dangers of going bankrupt.

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