Bankruptcy is a legal option that is often a last resort when you are unable to pay your debts in any way and have minimal assets. You must owe £750.00 in order for you to petition for your own bankruptcy. You must owe more than £5,000 in order for a creditor to issue a bankruptcy petition.

Bankruptcy Advantages

• Once an order is made, a third party takes over the administration, decision making and payment process of the debts
• Removes the uncertainty and stress caused by dealing with numerous creditors
• Once discharged, most debts are written off and creditors cannot pursue them. Some debts, such as Student Loans debts, are not included in bankruptcy. For those debts, the bankrupt will continue to owe them even once they have completed their period of bankruptcy and have been discharged

Bankruptcy Disadvantages

• The debtor will lose any realizable assets of value such as property or vehicles. Though they may not be sold immediately and perhaps not even until after the bankrupt has been discharged
• If a business is owned, this could be sold, and any employees dismissed
• Should the debtor live in rented accommodation and have rent arrears, this could put the home at risk if the landlord considers those arrears are unlikely to be paid. In this case, the landlord could commence possession action. Also, some tenancy agreements contain a clause stating that an un-discharged bankrupt cannot be a tenant

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