Bankruptcy

Bankruptcy is for those people who have substantial debts with no means of repaying them, and should only be considered if all else has failed. An action of last resort. Although there is not the stigma attached to becoming bankrupt as there used to be, it can still be a bruising experience in the public glare.

An Insolvency Practioner should be consulted before taking this action so you fully understand all the ramifications.

You can be made bankrupt by voluntarily doing it youself, or by another party to whom you are indebted, or by the supervisor or participant of an Individual Voluntary Arrangement that you have failed to adhere to.

In bankruptcy a legal trustee appointed by the courts, takes control of your assets to repay your creditors. Most of what you own may be used to reduce your debts, and after a period of time all your debts are written off and you can start over. Any income you generate, over and above what you need to live a basic lifestyle, during your bankruptcy, must be paid to your creditors.

Your creditors cannot pursue you once your application to court has been filed, but your credit cards and bank accounts may be closed, you will have a poor credit rating, perhaps for many years after you are discharged from your bankruptcy, and all the court proceedings where you will be examined over the reason for your financial plight, will be reported in the newspapers so that anyone could learn about it.

Make sure you have done a detailed budget exercise before deciding this is the route for you, and consider an alternative such as an Individual Voluntary Arrangement.