It is hard for anybody who becomes insolvent. It shows in no uncertain terms that your money management skills are not up to scratch and you can’t meet your commitments financially anymore. In the past becoming insolvent was just a step on the path to becoming bankrupt, nowadays it is not as certain.
By introducing legal alternatives for the high number of people suffering insolvency, the UK Government was able to solve the high number of bankruptcy rates in the country. The two solutions that the government introduced were the IVA (Individual Voluntary Arrangement) and the Debt Relief Order. Even with these legal solutions available, not everyone facing insolvency is eligible and bankruptcy is the only choice.
The most difficult aspects of declaring bankruptcy is the social stigma surrounding it and admitting financial failure. Amongst older generations who never experienced high amounts of credit and debt, bankruptcy is regarded with particular dislike.
Details and information regarding those who go through bankruptcy are available for the public to view and so there is no way to hide your bankruptcy status. New bankruptcy cases would also appear in local press until very recently however cases regarding people that are of ‘particular importance’ cam still be published. National cases of bankruptcy are still reported in London Pres and all information regarding bankruptcies throughout the country is made available to the public their the online Insolvency Service. When it comes to your credit score, bankruptcy will remain on a credit record for at least 6 years and possibly longer when long term clauses have been used which will make it impossible for the bankrupt individual to obtain any more credit.
It’s for these reasons that bankruptcy really should only ever be the absolute last resort for those in financial difficulty. It will have long term repercussions, potentially socially as well as financially and is a particularly unpleasant process to go through.
Residents of Scotland seeking an alternative to bankruptcy are not eligible for IVA. The Scottish equivalent are Trust Deeds.