Bankruptcy is often considered as the end of the road by people in financial crisis. However, most of us don’t know much about the process or the steps involved, which is the reason why there are so many myths surrounding it. Filing for bankruptcy starts by completing the process on the government website by paying a fee, after which a trustee is appointed for the procedure, who will take control of the assets to repay the creditors. In most cases, bankruptcy order is completed within 12 months. If you are dealing with financial distress, it is wise to consider all the options, including bankruptcy. In this post, we will debunk some of the common myths surrounding bankruptcy.
- One has to give up the car – As mentioned, if you use your car for business or work, you may be able to keep the car. However, there are many aspects that will be considered, such as the value of the car and if the car is owned by you in the first place. Let’s say you have an expensive car, but you can always travel in a hatchback to office.
- Creditors cannot make one go bankrupt – Creditors have considerable power, especially if you owe them more than £5,000. While the procedure is costly for the creditors, they can initiate the proceedings. They will first send a formal payment demand called the ‘statutory demand’, following which they can send a bankruptcy petition. No matter whether you get the demand notice or the bankruptcy petition, take legal advice immediately.
- Bankruptcy will last a long time – Bankruptcy, as mentioned earlier, will be over within 12 months. The effects, however, as we discussed, can last longer. Bankruptcy will appear on your credit file for six years after getting discharged, but your name will no longer be in the Insolvency Register.
- I must give up all I have – That’s what people have in mind while filing for bankruptcy, but the same isn’t true always. While a bankruptcy trustee will be appointed to take control of your assets and create a debt management plan, you will still have some of your belongings. For example, the tools of your trade or the car that’s used for business will not be taken.
- I can manage to hide assets – Working with a bankruptcy trustee requires complete fairness and honesty. You cannot hide assets, because a lot is at stake. Even if you manage to hide some of your assets, the consequences can be really severe. Be fair with the trustee, so that you can have an effective debt management plan that’s easy to accomplish.
Still have questions? To know more on bankruptcy and if this is the right decision for your life and career, take a moment to consult business rescue experts. Managing your debts needs to be done right, and it is possible to avoid bankruptcy if you act in time. You don’t have to lose your assets and everything you have, but it all depends on your financial status.