Bankruptcy
Bankruptcy is another option that
can help citizens escape from the burden
of financial stress and pressure. Just like the formal
and informal route, bankruptcy is an option that can
help an individual when they are unable to meet credit
commitments and are financially unstable. By going bankrupt,
one can be freed from their outstanding debts however
the downside is that should you have any assets, these
are distributed amongst your creditors fairly. Further,
bankruptcy is publicly advertised and does have a stigma
attached to it.
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Anyone
can go bankrupt, and this can be done by the following
ways:
1.Involuntarily - The creditor can make a claim against
the individual providing they are owed a minimum of £750.00
2.Voluntarily – The debtor themselves can file for
bankruptcy
There are both advantages and disadvantages to bankruptcy
proceedings.
One advantage for the person becoming bankrupt is the
financial stress and worry can soon be over. It is usually
one year and in some circumstances, under one year when
a bankrupt can become fully discharged. The disadvantages
on the other hand are that you lose control of all your
assets. It is difficult to obtain credit of more than
£250.00 without permission from the lender. You
are not allowed to act as a company director, take any
part in formation, management or promotion of the company
without seeking
permissions from court. Your credit is affected for many
years and cannot hold any post as a chartered accountant,
lawyer, justice of the peace or become a member of the
local authority. |
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