Not only can companies go bankrupt, but even private individuals can accumulate such high debts making it impossible for themselves to pay them entirely.
In such cases of personal insolvency, filing for personal bankruptcy can be a way out. Consumer bankruptcy, as the official name is, is often a lengthy process, and it usually takes around six years.
In the meantime, you have to limit yourself severely and disclose your financial circumstances. You can start a debt-free new life after completing the procedure. Here are some important things to know about personal insolvency.
1. What Happens when you Face Personal Insolvency?
- After reminders and requests for payment have failed, the bailiff is usually at the door.
- Even for small purchases or gifts, you hardly have the money.
- Some even end up sitting in their apartment without proper heating or electricity because they could not pay the bills.
- Ultimately, those affected can no longer participate in normal economic life, experience isolation, and sometimes even social exclusion.
2. Are you Looking for a Way Out?
Anyone looking for a way out of personal insolvency should contact a personal insolvency advisor. They often give you tips and an overview of ways to get out of debt and can also assist you if you want to file for personal bankruptcy.
Now we have brought personal bankruptcy into the picture, you must know the pros and cons of filing personal bankruptcy.
Here’s a list of pros of filing for personal bankruptcy:
- Get a fresh start as you will get rebooted into a debt-free person.
- You will see no more visits from the bailiff.
- No worries about receiving regular reminders from the creditors.
- The subsistence level is secured.
- Debt relief becomes possible after just a few years.
Here’s a list of all the cons of filing for personal bankruptcy:
- It is a lengthy process, and you need to adjust your dates and timetable, keeping the proceedings in mind.
- Your publication and employer know, and this can affect your relationship if not handled properly.
- Unemployed consumers have to take care of work and must not turn down reasonable job offers. This obligation is called compulsory employment in bankruptcy law. If the debtor fails to do so, he risks exemption from his remaining debts, and all efforts have been in vain.
- Modest lifestyle becomes a must for some time.
- Trustee, lawyer, and court costs can burn your pocket depending on the kind of firm you have hired. Hence please hire a personal insolvency lawyer who charges less.
- Change of home, electricity provider and insurance will become almost impossible for the next three to four years.
3. Important Things when Filing for Bankruptcy
With the bankruptcy process, you have some obligations you should know. The most important include the following:
- Disclosing your wealth and income.
- Informing the court if you change your place of residence or work.
- You must commit to accepting any reasonable work.
Even if bankruptcy has disadvantages and it brings a difficult time, it can be the right solution in individual cases to permanently escape the effects of personal insolvency. Whether personal bankruptcy is the right one always depends on the particular situation of the debtor.
For people whose financial situation is unlikely to improve in the next few years, personal bankruptcy can make sense despite its disadvantages. The same applies to consumers with extremely high debts with no chance of paying them.
The thing to know about personal insolvency is it usually takes around six to seven years, but it ensures you can start a new, debt-free life after the tedious bureaucratic process which came from personal insolvency.
