For many, personal bankruptcy is often a “last resort,” determined in part by harassing stress of credit and debt collection companies. Even though bankruptcy might appear like a fast and simple fix to the distressing calls and restless nights, one must never rush into making such a decision. While filing for bankruptcy can momentarily end the consequences of your financial condition, almost all others who have gone bankrupt admit that it was one of the biggest mistakes they ever made.
The impact of personal bankruptcy can have serious effects on your current and future financial position. Let us see how:
Since bankruptcy is essentially a liquidation of assets, filing for bankruptcy puts your assets at risk. This includes properties, shares, personal valuables. These items can be sold by the trustee to settle outstanding debts.
While current assets are obviously at risk, a lot of people do not realize that future assets such as inheritance money can also be subject to claims by creditors.
Besides the above, the impact of personal bankruptcy affects the individual’s future credit status too. An undischarged bankrupt cannot act as a company director and would not be allowed to obtain further credit till his case is dismissed by the court.
Another professional downfall means being exempt from holding an indirect or direct management position in a company, nor can you hold a position as a counselor, magistrate, MP or Estate Agent. A little closer to home, you also cannot serve on a school or college’s board of governors, not can you seek employment at security firms or in other civil services.
The impact of personal bankruptcy has even harsher realities, particularly after the bankruptcy order is published locally. This notice can potentially have an immediate and earth-shattering impact to the individual’s name and personal dealings. Unlike corporations that can take on different trade names, individuals are unable to do so, meaning they cannot hide behind a different name the order can potentially follow them forever.
Finally, a personal bankruptcy will affect your reputation. Since the bankruptcy proceedings are very public with your financial affairs being examined in open courts, the experience will not only increase your stress levels, but can be very humiliating.
On top of all of this, a personal bankruptcy will have even more of a financial impact given the court costs and processing fees that come with filing. If you are considering bankruptcy as an option, then try gaining some knowledge before hand.
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