Bankruptcy occurs when a person can no longer pay off his debts, which usually results in the liquidation of most, if not all, his current assets. There are recent elevations of the percentage of those that are filing bankruptcy, probably the only elevation aside from unemployment.

Bankruptcy is an option chosen by those individuals who have no more option to pay off their debts.  This can be directly chosen by individuals, or sometimes a situation when those under IVA failed to pay off their monthly costs. Which ever way bankruptcy is acquired, the process, the stigma and the effects will all be the same.

Filing bankruptcy may be a very sound way of getting your creditors off your tail, but then this is just temporary relief. More ‘annoyances’ will come your way during bankruptcy. For one, tenancy agreements may throw you out of your apartments. Second, transaction fees for the whole bankruptcy procedure can be very expensive. Third, your past and present financial status will be investigated, if there are any irregularities, and then you may be subjected to court proceedings.

More serious consequences of bankruptcy involve not being able to hold key positions, either in the government or private sector. Some positions that can not be kept or accepted are military personnel, public office, magistrate, accountants and solicitor and company directors. Your name will also be publicly announced in the London Gazette and in some other well-circulated media forms. Another severe outcome of bankruptcy involves Bankruptcy Restrictions Order, this is when the debtor/s (you) are found guilty of acts that are inherently wrong. This means that aside from the restrictions of common bankruptcy, there will be more limitations and that the term will last from 2 years up to a total of 15 years.

Although, bankruptcy has that much burden, there are some reliefs from filing it. After you are discharged from bankruptcy, you are virtually debt free, only those debts not covered will remain lie student loans. In such a way, bankruptcy also gives the chance to rebuild your credit worthiness. However, this will be a permanent record on your credit so do not be surprised of a lower credit rating even years after the discharge. Another gain from this seemingly tough ordeal is that your creditors can no longer change their minds during the bankruptcy period, or after, they have neither right to sue you for your credit nor to collect more.