It can provide a fresh start (subject to certain restrictions) and relieves you of the burden of your debts but there are also drawbacks, including:
- You will lose control of the majority of your assets which will be taken and sold in the bankruptcy estate. However, there are certain exceptions, such as household furniture, tools of the trade, and pension policies.
- Depending on your income, you may have to make contributions from your disposable income for a period of three years.
- It is possible to trade as a sole trader whilst bankrupt but there are some significant difficulties with continuing to trade.
- There are several restrictions imposed on bankrupt people and you cannot act as a director of a limited company.
If you are considering bankruptcy it is essential to take professional advice before doing so. Bankruptcy is a court process and is extremely difficult to reverse if it turns out to be the wrong option.
