Bankruptcy is one of several options available to those seeking help with debt. For many, it is the last resort due to the restrictions it can impose, as well as the possibility of losing their homes. However, there are certain benefits to bankruptcy that should be considered.
For people in debt that do not own their own property, bankruptcy could well be a suitable option as there is no danger of losing a home they do not own. In turn they will become debt free when the bankruptcy restrictions come to an end. However, it should be noted that some landlords require their tenants to disclose their status, and as some will refer to credit records (especially with a new tenant), it is worthwhile discussing the implications before making any decision.
Once the court agrees to the bankruptcy order, creditors are no longer allowed to harass the debtor for money owed. Harassment by creditors is often the most stressful experience an individual faces in these circumstances.
Once discharged from a bankruptcy order, any outstanding debt is written off. This means that the individual can begin to rebuild their financial standings after as little as 12 months (although it should be noted that the individual may have to continue to pay into the bankruptcy for up to an additional 3 years through what is referred to as an Income Payments Order.
Bankruptcy usually will only last for 12 months (up to 3 years), unlike some other solutions (such as Individual Voluntary Agreements) which can last up to 5 years or more. This means the individual will be free from debt far quicker, and therefore start to rebuild their lives sooner.
These advantages should always be viewed alongside any potential downsides, and it may be the case that an alternative solution may be available, and indeed preferable. As always, those considering bankruptcy should always seek advice from a licensed money adviser or insolvency practitioner, or indeed from one of the non fee charging organisations such as the Citizens Advice Bureau (CAB), National Debtline or the Consumer Credit Counselling Service (CCCS).