Once upon a time, bankruptcy was probably the worst thing that could happen to a business person. Those times are over, thank goodness. Today, filing for bankruptcy is a quick, easy, and common court process that isn't meant to punish the creditor. Instead, it's a way to get rid of debts that can't be paid and let everyone move on. Even though most people wouldn't want to go bankrupt, it's usually seen as a good thing when it has to happen.
Once upon a time, bankruptcy was probably the worst thing that could happen to a business person. Those times are over, thank goodness. Today, filing for bankruptcy is a quick, easy, and common court process that isn't meant to punish the creditor. Instead, it's a way to get rid of debts that can't be paid and let everyone move on. Even though most people wouldn't choose to go bankrupt, when it happens, it's usually seen as a relief rather than a shameful punishment.
When You Become Bankrupt
When you can't pay back your debts, you file for bankruptcy. One of your creditors, someone you owe more than £1,500 to, will ask the court to declare you bankrupt. The job will be given to a trustee, and all of your creditors will tell him how much you owe them. He will take everything you own and use it to pay off your debts. Creditors will be paid back in proportion, which means that if your assets aren't enough to pay off all of your debts, each creditor will get the same amount back.
What are the bad things about going bankrupt?
There are clear problems with this. By getting all of your property, the trustee will leave you with almost nothing. Everything he thinks is valuable, like your home, car, and savings, will be gathered up and sold. If you have a family, it can be very upsetting because they have to leave their home. If you rent your home, this won't affect you because the trustee has nothing to take. Your clothes and most of your furniture will not be taken by the trustee because they are too personal and not important enough to take.
And What Are the Pros?
The good thing about going bankrupt, though, is that it lets you start over. No matter how much you owe or how much you can pay back, you will come out of the process with a clean slate and no debts. Even if someone forgot to make a claim to the trustee, you will no longer have to pay them anything.
The Future After Bankruptcy
After your bankruptcy is over and you've moved on, you'll be able to start over with your finances and, likely, your personal life. Bad credit ratings will happen, but it is possible to rebuild your credit. Just like a child, all you need are small steps. Step by step, you'll get more credit options, and after a few years, your credit score will be "average" if you stay on track and don't fall for any quick fixes.
Even though the bankruptcy process can take a while, during which you won't be able to manage your money and may have to give some of it to the trustee, most people think it's worth it, and you'll come out of it ready to start over.
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