Bankruptcy can be a very positive solution. Don’t think of this as the worst time of your life but the start of a new chapter. Bankruptcy has changed dramatically over the last few years. In 2004 the laws were changed in relation to individual Bankruptcies. The standard duration of a Bankruptcy is now only 12 months.

If handled correctly, your Bankruptcy may last for only around 8 months. Once you are discharged from Bankruptcy you are back to normal with two main changes. You will be debt free but with a Bankruptcy showing on your credit record for the next six years. This then leads to the second stage of the recovery process and time to start to rebuild your credit!

The Credit Hospital has a Bankruptcy section. Bankruptcy is normally a once in a lifetime situation and for this reason it pays to take professional advice. Going through Bankruptcy alone is a big learning curve and if you are not careful you may fall into one of the common pitfalls such as a payment order that lasts for 3 years!

You need to be aware of how assets, property and equity are affected within Bankruptcy. You also need to focus on your income and expenditure as the Official Receivers Office regularly apply Income payment Orders. These are based on the Bankruptcy income and expenditure report and are a monthly payment to the Official Receiver Office that last for 3 years

Yes, it costs money to declare yourself bankrupt. A standard Bankruptcy will cost you £510 in Court Fees or £360 if you are on benefits or income support. The court process revolves around handing your paperwork in, paying your fee and swearing an oath. You are declared Bankrupt on that day and from this point you are under the full protection of Bankruptcy. All creditors included within the bankruptcy cannot continue to harass you and can then only deal with the Official Receiver. You will at last get relief from the constant barrage of letters, phone calls and debt collectors.

Many thousands of people are currently in an IVA (Individual Voluntary Arrangement).  This form of insolvency solution allows you to pay off your debt, over a fixed period of five or six years. The interest is frozen and a monthly payment is agreed with the creditors.

In many cases if the person owns a property there may be a re-mortgage structured in the fourth year. The additional funds from this will also be passed to the IVA Company and then eventually split between the creditors. In some cases 50% of additional earnings may also be taken by the IVA Company.

Sometimes an IVA is the best form of dealing with the person’s debt, however in some cases Bankruptcy could be a better option. The Credit Hospital as a company do not offer to provide IVA’s but The Credit Hospital can explain and discuss this option.

Did you know that the Office of Fair Trading warned five financial management companies in 2007 over misleading advertising? This information can be seen by clicking on www.oft.gov.uk/news/press/2007/176-07