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What are the benefits and consequences of bankruptcy?

Bankruptcy / Guide

Once your Bankruptcy is awarded (which means it’s accepted), you’ll only have to make payments towards your unsecured debts if you can realistically afford to. Your lenders will deal directly with the Official Receiver who administers your bankruptcy, and are not allowed to take any further action against you.

If you complete your bankruptcy successfully, you’ll be discharged, and any debt you can’t afford to repay (that was included in your bankruptcy) will be written off.

Bankruptcy will affect your credit rating. It will appear on your credit file for six years, which can prevent you from obtaining credit, or at least make it difficult and/or more expensive, in the future. It could affect you beyond that period too, as you may be asked in future applications if you have ever been bankrupt.

It may also affect certain types of employment and your ability to own or run your own business. Some of your assets may be sold and the money put towards your debts, although certain items are excluded, for example, essential household goods or tools for work. If you own a vehicle which has a low value, or if it is essential (for example, you couldn’t do your job without it), the Official Receiver may let you keep it.

As bankruptcy will put you at risk of losing your assets, it’s best to speak to a debt advisor who can discuss your individual situation in greater detail, as another debt solution might be more suitable.

Next: How much debt do I need to go bankrupt?

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