Once you are unable to pay your debts and must file for bankruptcy, this action will remain on your credit report for ten years. This will regrettably create a negative reputation for anyone seeking additional credit, employment, or other financial opportunities.
This does not mean that you are without options, but it will create a number of obstacles for future endeavors. Due to these drawbacks, it may at times be prudent to seek the counsel of a bankruptcy attorney, who will assist you in considering the possibility of proposing a compromise to your creditor. This may be an informal arrangement in which you consent to repay your debts over a specified time period. This agreement is not legally binding, so your creditor may at any time decide to demand full payment of your debt and obligations.
You could also elect for an administration order rather than paying your creditors directly. In this instance, you will pay your debt directly to the court, which will function as an intermediary. Unfortunately, not all debts qualify for this procedure, as the maximum debt allowed is £5,000. You will also be required to provide proof of a consistent monthly income in order to secure a loan. If you fail to make a payment, the court will promptly cancel the order and subject you to the restrictions of a bankruptcy proceeding.
IVA is another option for bankruptcy. You can agree to make a proposition to your creditors in the presence of the court, promising to repay a portion or all of your debt, with the assistance of an insolvency practitioner. For this procedure, you will need to locate a court-registered insolvency practitioner. The court will issue a ""interim order"" to prevent creditors from proceeding with bankruptcy petitions against you once you have filed for insolvency.
It is always advisable to consult with a bankruptcy attorney or other professional expert in liquidation management and insolvency in order to find the optimal solution to your personal bankruptcy problem.
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