Posted on: 22 February 2017
If your financial situation has overtaken you, you may have started to research your bankruptcy options. As you may know, this is quite a complicated area of law, but usually people want to know exactly what's going to happen to their income, their assets, their credit rating and often, their freedom to travel. What do you need to consider before you go ahead with this course of action?
One of the biggest worries that people have is that they will lose all of the assets that they have accumulated and that this will essentially make them destitute. You should understand that, generally speaking, bankruptcy proceedings will not attempt to possess the home that you live in on a daily basis, nor the household belongings within it.
However, if you have a secondary home, then that certainly will be considered for redistribution, as will any other major assets like a boat or a car. When it comes to your car, though, you are allowed to keep a certain amount of "equity" before any action will be taken. So, if you have a car that has a loan outstanding, you may well be able to keep that, so long as it doesn't have a certain amount of equity once the loan has been deducted.
How will your income be affected? Typically, bankruptcy is declared for a period of several years, during which you will be required to contribute some of your income back into the 'pot'. In other words, your salary will be garnished so that some money is paid towards the debts that you previously built up. If you have child support to pay, then this is not taken into account and taxes are also deducted from your income before it is viewed for repayments. You will usually be allowed a certain amount for typical living expenses and then the remainder will be assessed. Note that if you're self-employed, the amount that you repay may be calculated on an annual basis due to the unpredictability of earnings.
Certainly, your credit rating is going to be significantly affected by bankruptcy. The only thing that you can really do here is to make sure that all repayments from this point on are made on time and your situation should gradually recover through the months and years ahead.
Usually, you will still be able to travel internationally after you have declared bankruptcy, but much can depend on the specific circumstances of your case. It's best to have an experienced solicitor on your side when filing all of the paperwork to ensure that your best interests are front and centre throughout.Share