Life After Bankruptcy

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What is life like after bankruptcy?

For many people the idea of becoming insolvent is unthinkable, until they are faced with the prospect of having to file for bankruptcy voluntarily, or having action brought against them. This is because the worrying connotations attached to the term make people unwilling to address such issues.

We all know bankruptcy is very serious, but the situations wherein this may be a necessary course of action vary wildly in terms of severity. In fact, to file for or be made bankrupt you only need to owe £750 or more, to one or more creditors, and be unable to pay this off via any other route. Needless to say, any amount owed out seems mountainous when there’s no money to meet the repayments, but still the baseline level of debt required is relatively minor in today’s terms.

What this means is the repercussions of bankruptcy are often less terrifying than some people immediately presume, and the impact differs from case to case. For example, someone who files a petition because they owe £1,000 on a credit card could find themselves returning to relative normality faster than someone who owes out ten times that figure, logically it will take longer to repay what’s owed the higher the outstanding balance is.

Most bankruptcies will last for 12 months before discharge. This is variable depending on how your conduct is perceived by the courts and Official Receiver, who is appointed to oversee the case. Technically this ends the process, but depending on the specifics of your bankruptcy order any Income Payments Agreement or Income Payments Order, wherein you are instructed to make contributions towards the remaining debt after the sale of assets, can last for up to three years.

With this in mind life after bankruptcy is different for every individual, and depends on the circumstances surrounding their insolvency, not to mention their outlook. Some find themselves worried about what this will mean for the future, others see wiping the slate clean, with some restrictions, as a huge relief. However, there are certain factors that anyone in this situation must take into account.

Credit, for example, will be available, but not very easily after discharge. Any history of financial crisis can mark you out as a high-risk to lenders, and as such it could be an idea to look at the many credit repair services currently available. There are bank accounts that guarantee you will be accepted even after bankruptcy too, but many come at a price. Similarly, credit cards are a great way to rebuild your score, so specific products exist for bankrupts, but it’s not an easy task securing one. Meanwhile, mortgages can prove impossible to obtain without first working towards improving your credit rating.

These are just a handful of reasons why it’s always advisable to look for some independent debt advice, whether considering bankruptcy or well into the process already. No two instances are identical, and the options open to people that have become insolvent do change. As such, ensuring you have access to impartial, up to the minute information is absolutely essential to avoid making any decisions in error. By speaking to the experts it’s wholly possible for what seems like a nightmare to become far more manageable, and much less stressful. After all, this course of action is designed to help, not hinder.

Money Helper (formerly The Money Advice Service) is a free service set up by the Government to help people make the most of their money. If you would like to learn more click here. is not regulated and is for fact-finding only. We can help assess your circumstances and point you to someone who can provide available options that suit your debt criteria.

If an individual meets the required criteria for an IVA based on our packaged case, this will be passed to one of our partnering Insolvency Practitioners to get direct advice. If the individual does not meet the criteria for an IVA, The Insolvency practitioner is able to provide contact information for other third-party organisations that offer advice on other available debt solutions. For full details view our Privacy Policy.

If you decide that an IVA (Individual Voluntary Agreement) is not the best option for you after we have prepared the necessary information, you can opt out of the process and have all of your details removed. We receive a fee from the third party that we refer you to for introducing you and for the work we have completed. However, you will not be responsible for paying this fee. The third party will contact you directly to continue the process of your IVA application or to explore other solutions, but only with your permission after we have introduced you.