While people may have an application for bankruptcy accepted, it does not mean it is the correct way out of debt. Other options, such as an Individual Voluntary Arrangement (IVA) can be much more suitable.
People struggling with bad debts are often so glad to be clear of them that they pay no heed to the knock-on effects and just accept them.
“Many borrowers see bankruptcy as a new lease of life,” said Frances Walker, of the CCCS, according to the Independent.
“For many, being free from the worry of the debt is such a relief that it is worth the consequences of the bankruptcy.”
With bankruptcy, all someone’s assets are divided up to creditors and the history of bankruptcy is on their credit file for some six years. However, due to the Enterprise Act, bankruptcy appears more tempting than ever to someone struggling with debt.
“It [bankruptcy] now looks very attractive – you can be discharged from bankruptcy after six to 12 months, with all your debts cleared,” said Tony Supperstone, president of R3, the insolvency practitioners’ trade body, according to the newspaper.