8 Myths About Debt Part 2

Understanding Personal Risk and the Implications of Becoming Bankrupt

Myth 5 – You will lose your property if you become bankrupt

It is a common misconception that you lose your property in bankruptcy. The asset within any property is the “equity”. This is the value of your property minus what is owed on the mortgage.

Once bankrupt the Official Receiver automatically takes ownership of your equity, however a third party i.e. a spouse, relative or friend can purchase the equity from the Official Receiver. If the equity has no value or is negative then a £1,000 administration fee plus a nominal solicitor’s fee can be paid to The Official Receiver. They will then relinquish their interest in the property.

Myth 6 – You can’t have a bank account if you are bankrupt

It is certainly difficult to obtain a bank account if your bankrupt, but it’s not impossible. If your try to open a “normal” bank account with any bank you will fail the credit check and be rejected.

At the time of writing this blog (March 20), we are aware that only Barclay’s provide bank accounts for bankrupts. As long as you have the required proof of address and ID you’ll be able to open a “basic” account. They provide a Visa Debit card and allow direct debits & standing orders. They also have branch, telephone and on line access.

We believe it is extremely unfair for the other banks to deny bankrupts a bank account. However in the near distant future this may change as the government is currently in talks with the banks to change their policy.

Myth 7 – Your employer will find out that you’re in debt

Bankruptcy is the only debt solution that involves your name being published. However it’s unlikely your employer is going to see your name in the obscure publication, the “London Gazette”.

If you bury your head in the sand and do nothing, a creditor may obtain a CCJ. Although it’s unlikely, once they have a CCJ they can apply for an attachment of earnings, requesting that your employer deducts money from your wages to pay the debt. Your employer may then assume you are having financial difficulties if this was to happen.

Myth 8 – You’ll never be able to get credit ever again

If your experiencing creditor pressure but have a good credit rating, any debt solution utilised to address your predicament will affect your rating. However you have to decide what’s more important… endless worry with a perfect credit rating or peace of mind and poor credit rating.

CCJ’s, IVA’s and bankruptcy all stay on your credit file for a total of 6 years. After this period all records are removed and you can effectively obtain credit again.

At Oakdale we are specialists who act solely for you (the debtor) and not your creditors. If you would like to discuss any of the above myths in more detail, call one of our experienced commpasionate advisors on 0151 928 4434.