Bankruptcy isn’t a favorable term for anyone, and unfortunately, there are plenty of myths surrounding it. Most people don’t know much about bankruptcy and the process that entails. The process begins by filing for bankruptcy on government website, for which a fee must be paid. Following this, a bankruptcy trustee will be appointed, who will take control of the assets to repay the creditors. In this post, we will discuss some of the common myths about bankruptcy in detail.
Myth 1 – The person will lose everything
It may seem that bankruptcy is the end of the road, but you might still be able to keep some of your things, especially the ones that are considered as tools of trade. As such, the car you use to travel to work or the equipment required at the workplace will not be taken, because you need these to earn income and repay creditors. However, your primary assets will be taken over, and the trustee will freeze the accounts.
Myth 2 – One can hide a few assets
As lucrative as it may sound, it is never advisable to hide facts from the bankruptcy trustee. Even if you succeed in hiding an asset or two, you will have to bear the consequences, which can be really severe to say the least. Work with the bankruptcy trustee so that you can have a proper debt management plan in place.
Myth 3 – Only the person can file for his/her bankruptcy
Creditors have the power to initiate bankruptcy proceedings, provided you owe more than £5,000. However, this is usually a costly affair for the creditors, and first, they will send a formal demand for payment, called the statutory demand. After this, they will send the bankruptcy petition. In either situation and regardless of whether you have the statutory demand or bankruptcy petition, take insolvency advice immediately. Ignoring the situation will not help.
Myth 4 – One must give up the car
If your car is essential for earning income or for employment, you might be able to retain the same, subject to a few terms and conditions. There are various things that determine whether the car will be saved from bankruptcy or not. For example, what’s the value of the car? Can you manage with a smaller and cheaper car? Do you own the car?
Myth 5 – One cannot work anymore
There is no denying that bankruptcy does affect your ability to get credit, and you will need a debt management plan to get things on track, but bankruptcy doesn’t affect your choice or option to work. How are you supposed to repay creditors if you don’t work? Unless you are working as the director of a company, bankruptcy doesn’t affect your work options, although it can impact your career will remain in credit file for six years.
If you want to know more on insolvency and bankruptcy, get in touch with business rescue experts to know more details. They can guide you confidentially as you can manage your debts and financial issues better.