Last Updated on Feb 25, 2020 by James W

There is a lot of stigma attached to personal debt and bankruptcy, and many people suffering from debt continue to fall behind with monthly payments, resulting in excessive charges and fees. Borrowers often try a variety of ways to get out of debt, and many even borrow more money to pay off balances that require immediate payment. Sadly however, by the time they realise that bankruptcy is a viable option, they are too overwhelmed by their debts.

Although bankruptcy in the UK may have a taboo attached to it, in many cases it is the best option for people with large amounts of debt. There are many ways to combat failing finances if your debts look to be spiralling out of control, and from bankruptcy to individual voluntary arrangements, professional help is only a phone call away.


Over the last 10 years, changes in government legislation have made it easier for people to get help with their debts. Although bankruptcy is an option recommended by accounting professions for people in severe debt, many of these legal changes incur further repercussions for years to come.

The Pros

One of the main reasons people file for bankruptcy is the discharge of debts. This discharge completely removes any obligation by the debtor to pay the debts they have incurred; however there are a select amount of debts that are not dischargeable. Bankruptcy also protects a debtor’s property from unsecured creditors, meaning assets can’t be sold to repay any of the debt owed.

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Another benefit of bankruptcy, and probably the most valuable, is the automatic ‘stay’. This is a court order that immediately prohibits all collection attempts by debt agencies on your assets and finances, and also stops any creditor action that is already in place against you, including repossessions, foreclosures and evictions.

The Cons

Bankruptcy may be discharged after one year, however it will stay on your record for a further five, meaning you will be unable to borrow or get any amount of credit, no matter how small. Furthermore, creditors are within their right to obtain a bankruptcy order against a debtor if they owe over £750.

There are also costs involved in filing for bankruptcy, and a debtor cost be financially discriminated against when applying for loans even after their bankruptcy term has finished. Although bankruptcy may discharge a person’s debts and leave them financially stable, there is no guarantee that it will fix any of the underlying problems that cause excessive spending and the subsequent debt that comes with it.

When your accounts are in trouble, getting financial advice should always be the first point of call. There are a variety of companies that are sponsored by the government to help people manage their debts, prioritise repayments, and stop assets being seized.


Author Bio:

This article was contributed by Lloyd on behalf of IVA Expert.


Founder and chief editor of Blogger, Affiliate Marketer, Tech and SEO geek. Started this blog in 2011 to help others learn how to work from home, make money online or anything related to business and finances. You can contact me at