What if I can’t pay my debts because of coronavirus?
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There are lots of things that would happen before a lender made you bankrupt. If you're struggling with debt, you could find the help you need before it even gets to that stage.
If you're worried that you might be made bankrupt, you should know that lenders try to avoid making people bankrupt at all costs. They definitely see this as a last resort. Lenders will try to come to another agreement with you before making you bankrupt.
We could help you to negotiate with your lenders and come to an agreement before it even came to that stage.
On the other hand, sometimes making yourself bankrupt is the best option if you really cannot afford your debts. One major advantage of making yourself bankrupt over a lender forcing you into it is that you have more control over the situation.
Only you or your lenders can make you bankrupt in England and Wales.
Would lenders make me bankrupt?
Lenders can make you bankrupt if you cannot repay them, but in reality they would have to take you to court and go through many other steps before it would even come to that.
Even if your lenders did take you to court, the court would ask you if you could afford a repayment plan, possibly involving reduced payments with frozen interest and charges, before making you bankrupt.
If you took matters into your own hands, it's possible to come to a repayment arrangement with lenders before they would take you to court.
Dealing with a debt problem and taking control of the situation yourself is usually better than waiting for lenders to turn to the courts.
Take action now
Thankfully there is help out there for people in this situation and Debt Advisory Centre could help. If you come to us for help, we can discuss your options with you to help decide what you feel comfortable about doing next.
If we think bankruptcy is the best option, we can help you to apply for your own bankruptcy. Or, if we think we could help in another way, we can do that instead.
What happens during bankruptcy?
You attend the civil court to have your bankruptcy approved. It's not a criminal proceeding, it's a meeting with a judge in their office and you can take a friend with you for moral support if you want to.
Bankruptcy usually lasts 12 months from the date it's approved, and can even be shorter if your case is straightforward.
During bankruptcy, part of your income is ring-fenced so you have enough to live on - heating, eating, a roof over your head, money for raising a family, etc. The rest of your income goes to your creditors and you may be asked to sell assets to repay your debts.
After usually just 12 months, you are discharged from your bankruptcy and any remaining debt is written off, although financial restrictions can apply for longer. Bankruptcy remains on your credit report for six years and can affect your ability to purchase financial products in the medium to long term.
If you're worried about your debts, speak to an adviser about your options today.
by Kyri LevendiBack to blog home