Bankruptcy Redefined

There are a number of myths surrounding bankruptcy and what is the ideal way to go about it. A large section of people believe that bankruptcy is extremely embarrassing and something which should be avoided at all costs. However bankruptcy is not a phenomenon entirely related to large multinational companies and business houses. In fact, any individual can choose to go bankrupt if they are stuck with a hefty mortgage or debts which they can’t repay anymore. Though going bankrupt may not be the ideal advice for every individual who is facing financial problems, it could be the only way out for some people who are having serious financial difficulties. 

Bankruptcy Redefined

The process of declaring bankruptcy is quite a simple one provided the individual contacts the right county court for help. A person will usually be declared bankrupt for a period of 1 year, however if the Official Receiver determines that the debtor has been negligent in their financial matters, a Bankruptcy Restriction Order can be imposed for up to 15 years. During the initial bankruptcy, and any subsequent Bankruptcy Restriction Order, a bankrupt cannot obtain a mortgage, be involved in the financial management of a company, hold public office, or work for the police force or military. Certain professions are also inaccessible to bankrupts.

In certain cases, the individual may receive his bankruptcy order along with an “Income Payment order” where the Official Receiver deems that the bankrupt has sufficient disposable income to make some repayments towards his debts. One of the most important aspects of going bankrupt is that once an individual is declared so, he won’t be able to exercise any control over his personal assets. The personal assets of a bankrupt person are taken over by the Official Receiver who may sell these assets and distribute the proceeds among the creditors in lieu of their unpaid loans.

After the period of bankruptcy expires, a person can once again take charge of their finances, be eligible to undertake mortgages and loans and get employed in various professional positions. After a person is declared bankrupt, a notice will be placed in a local newspaper and the London Evening Standard. The Official Receiver will also notify the creditors of the bankruptcy.