Bankruptcy stays on credit records for at least six years and can severely curtail credit and the ability to get a house, which is why those in debt should do what they can to evade it.
“You could have had marital problems or been made redundant,” warned Stuart Glendinning of Moneysupermarket.com of the dangers of bankruptcy. “Two years later you could be back on your feet and the previous problem may no longer be an issue.”
“But the impact will be felt for six years, which is a long time,” he added.
His warnings come as government figures show that the number of bankruptcies has reached new highs, but schemes exist that can help avoid this last resort.
Individual Voluntary Arrangements (IVAs) freeze interest, repay creditors as much as a debtor can reasonably afford and write off all remaining debt at the end of the arrangement (typically three to five years). Creditors cannot chase people in IVAs.
Individual voluntary arrangements (IVAs) allow those in debt to repay creditors an agreed amount each month in return for having to avoid paying interest.
With Mr Glendinning saying that bankruptcy is often caused by just one event, he believes that cutting down on spending and seeking debt advice can help a person avoid being driven to bankruptcy.