The Bankruptcy Process - Debt Free in 12 Months

Opting for Bankruptcy is an important decision of your life as it can transform your life forever. It is a decision taken as a last resort to payoff such a debt that has become complex to reimburse through the process of installments. Before going bankrupt, you should know about assets both liquid and fixed lying with you, which can pay off your complete or may be most of the underlying debt.

A fallacy about bankruptcy is that it will penalise you by seizing everything you own ranging from clothes to chattels, which is however so not the case. Under the bankruptcy law, you are protected against your creditors and it offers you another chance to go for a spanking new start in life. As per Insolvency Act Section 283 (2), the debtors are allowed to keep their belongings such as clothes, household goods, furniture, and own conveyance (the vehicle should not be too expensive otherwise you will have to surrender that as well). In case the car is taken, another car is provided of less worth performing the same job. In case of pensioners, you will be entitling for your pensions despite going bankrupt.

This Bankruptcy Law was altered in 2004 in which the obligatory period needed to dole out under the law was limited to one year, which was previously three years. Another positive thing under this law is that it gives a chance to the bankrupts to remodel their lives. As the bankruptcy process has been made so lucid and smooth, the bankrupts can be free from the bankruptcy charge even in three months if the creditors have no objection on that.

The reduction of bankruptcy process from three years to 12 months has brought a sigh of relief to the debtors opting for bankruptcy or planning to go for it as they feel it is a less painful time than it was previously. Since the time the bankruptcy law has facilitated the discharge time to 12 months, most of the bankruptcy cases in UK are settled within 7 months on an average basis. During the process of bankruptcy, if someone is found guilty of cheating or irresponsibility of any kind, the bankruptcy officer has the right to levy the bankruptcy restrictions for a period of 2 years to 15 years under the Bankruptcy Restriction Order.

Prior to the new law, creditors had the authority to wait for as many years as they want before asking for the equity to be released from a property. However, this has been limited to a period of three years. So the axe is likely to fall on you quite sooner.

The trustee can ask the debtors to give some portion of their income to the creditors. It depends upon how much a debtor can afford in this regard. This process is known as an Income Payments Order (IPO), and it remains effective for three years since the bankruptcy date. It means that although the debtor is released from the bankruptcy in 12 months time, he/she still has to pay the IPO for another 2 years.

Being bankrupt is a very painful time in a person's life. It is a last resort to any debt reimbursement method, which usually results in stigma, probable job loss, and embarrassment in front of family, neighbors, and friends as everything is investigated and you have to visit court for legal proceedings as well. Furthermore, everything is also exposed in the newspaper under the law. Going to court for the legal proceedings have a long term effect on a person's credibility and psychology. In order to face the complex procedure of bankruptcy, you should elect a qualified and experienced bankruptcy team to facilitate the whole process in an efficient manner without any hassle.

Despite all the mental and psychological stress a person faces during the bankruptcy process, at least there is a feeling of relief, though it is achieved with the passage of time.