Speaking from personal experience, he said that when he first started working in the bankruptcy field, some 25 years ago, there was a real stigma attached to bankruptcy and insolvency and such a route was only ever considered as a final option. Mr Sands believes that the pendulum has swung too far in the opposite direction, with many people using bankruptcy as an escape route after maxing out their credit cards.

Does that mean that with Christmas looming ever closer we will throw caution to the wind and spend far too much or will the looming ‘age of austerity’ encourage us to be just a little more sensible?

If you are troubled by debt, whether that’s because you’ve overdone the credit cards, you’ve lost your job, or suffered some other downturn in your circumstances, maybe the information here will help you to find your way out of debt. You’ll find information here about:

• Remortgaging with a poor credit history
  
• Protecting your home from repossession
  
• Freeing yourself from credit card debt
  

Other areas of the site will give information on selling your house fast or even how to maximise the current economic climate by buying a repossessed property.

On Friday the Daily Telegraph reported that more than 70 people an hour are being declared insolvent as, in record numbers, we fail to keep on top of our debts. Insolvencies have almost tripled in the past five years.

Yesterday, the Bank of England voted to keep interest rates at the all time low of 0.5%, thus postponing a sharp increase in the number of insolvencies that has been predicted to accompany a rise in interest rates. The full extent of the recession, experts warn, is yet to be realised.

Practice partner at insolvency practitioners, Tomlinsons, said:

“Many people who have been struggling with big debts and reduced income have managed to survive the past two years because of low interest rates. When interest rates rise, and rising inflation suggests that this could happen sooner rather than later, the number of people facing real financial difficulties will spike sharply.”

The action the minority or coalition government takes to bring the deficit under control will be critical.

The sad truth is that, whilst Britain is technically now out of recession, the harsh truth is that many of us are still living beyond our means. History shows us that personal insolvencies will continue their upwards trend for some time after the end of the recession.

If, as predicted, the new government raise taxes and reduce public sector spending, a lot of people will need to take drastic action to resolve their financial problems, such as applying for bankruptcy.

The most recently available individual insolvency figures show a total of 18,256 bankruptcies during January to March 2010, and 11,782 Individual Voluntary Arrangement (IVAs).

An IVA is an arrangement that is entered into with those owed money, while a bankruptcy involves a formal court order where assets are sold to pay off creditors.

Although an alternative to bankruptcy a debt relief order was introduced in April last year, the restrictions limit those eligible to apply – homeowners and anyone with debts above £15,000 are barred. Nevertheless, the final quarter of 2009/2010 showed an increase in debt relief orders from 5348 to 5,644

The expectation is that 150,000 people will be forced into personal insolvency by the end of the year.

Probably the first thing you need to know if you are in debt is that you are one amongst many. Okay, so the only debt you are worried about is your own but, just sometimes, it helps to know you are not alone.

The next thing you should know is that getting help is probably easier than you imagine. There are a number of agencies out there who will give you good and reliable debt advice. They will also help you to manage your finances in an attempt to prevent a recurrence of your current financial difficulties.

The type of debt you have amassed is, largely, irrelevant; whether in the form of bank loans, overdrafts, store cards, or credit cards, there are solutions out there.

Debt Management Programmes

When you are in serious debt there is an overwhelming feeling of powerlessness; you owe money that you don’t have but, no matter how long you ‘sleep on it’ when you wake up the debts are still there and the money isn’t.

Debt management programmes are a method of bringing you back in control of your finances, whilst at the same time reducing the amount of money you have to pay out every month. Debt management is particularly useful if you are in receipt of a regular income and the amount you owe is not too large. You will work with a personal adviser who, after analysing your income against your total outgoings, will negotiate with your creditors to bring you repayments down. You will pay your debt manager an agreed monthly sum, out of which he will pay your creditors at the lower agreed rates. One of the most attractive aspects of this system is that your creditors negotiate direct with the debt manager, rather than with you. This means that the payment-demanding phone calls and letters will gradually disappear.

IVA

An IVA, or Individual Voluntary Arrangement, is a debt solution that is used where the most probable alternative is bankruptcy. In an IVA, your creditors will agree to write off part of your debts, allowing you to make monthly payments that you can afford over a period of five years. This debt solution is most effective if you have large debts, over, say, £15,000 and no way of paying them at the current levels.

Finding Debt Solutions

There are a number of organisations set up that provide free debt advice. We also provide more information about debt consolidation.

Financing your Debt

It is important to remember that organisations that provide debt solutions are businesses, that is, they earn their money by helping you. Having said that, they are also aware that the reason you are seeking their help is that you can’t afford to pay your current debts, let alone new charges. For this reason, a number of payment solutions are on offer so there will be one that is right for you.

The main message here is that there are many thousands of people in the same situation as you and, that being the case, there are ways on offer to help you get off this treadmill.

Liz Jones of the Daily Mail is famous, or should that be infamous, for washing her dirty laundry in public. Ms Jones updated the nation weekly on the anguish of her failing marriage, following which we were treated to a running commentary on dying pets and hardening hearts as she retreated to Exmoor. However, Ms Jones recent soul-searching is actually heart warming in that it demonstrates the folly of the see it-want it-buy it philosophy that so many of us have subscribed to over the recent years. I’ll let poor Liz tell you her own story; it just might make you feel a little better about your own circumstances.  Entertaining as Ms Jones is, you might find our debt solutions a little more helpful.

When the word ‘overdraft’ appeared in my email inbox on Friday, my heart leapt into my mouth – something it tends to do if anything vaguely financially-orientated makes it through the sand and into my consciousness.

It turned out to be an email from my editor, drawing my attention to a new survey that revealed one in ten people in the UK is always in the red, with more than 38 per cent dipping into the red at least once. Would I like to write about my overdraft? Hmm, would I?

While I have written openly about many shameful, previously hidden aspects of my life (lack of sex, facial hair, grey roots, plastic surgery, OCD), writing about my money worries in a national newspaper has been the most difficult, exposing thing I’ve ever done.

Since publishing on these pages a piece about how I got into debt, everyone I come into contact with, including builders, carpenters and oil delivery men, now demand their money up front. Hotel receptionists, shop assistants, even car park attendants regard me with suspicion. My gardener has gone grey.

But even if you don’t, as I have, broadcast your bankruptcy, those one in ten of us who live in the red and on our nerves exist in a twilight world where every move, every thought, is ruled by how close you are to that magic number: your agreed limit.

Your relationship with your overdraft (is the cash machine cross?) becomes the most important in your life. It is all consuming, a dirty, hungry weight around your neck that saps your strength. It’s like a really bad husband. Or a nasty, painful boil.

One of the biggest bankruptcy questions is can you be thrown in jail for not paying your debts. This only happens in extreme cases, like if you refuse to pay your taxes or don’t pay child support. As long as you pay these debts, there is not much a creditor can do to you. The key is, however, that you must live simply with only the basic needs until your debts are no longer collectable.

For example, a creditor can sue you for the debt you owe and take you to court. However, even if that debtor wins in court, which is most likely, he or she cannot take away your basic needs. Basic needs that cannot be taken include clothing, food, ordinary household items, like your bed and blankets (as long as they are not excessively ornate or valuable), and checks you receive for social security, public assistance, or unemployment. If you have nothing else, the creditor has nothing to take.

Be forewarned that you will not be able to save any money during this time period, nor will you be able to live with anything other than the basic human needs. If you start earning an income, anything you do not use for food and other basic human needs can be taken away. A court will decide how much your wages will be taxed.

After a number of years, the debt becomes uncollectable. The basic plan behind doing nothing is that you will live simply until this time arrives. It will probably be unlike every debt you have, contingent on what kinds of debts they are. However, after that time period, you can again start saving money, living more extravagantly, and even applying for new loans. Of course, you probably will not quality, but after seven years, all past debts are wiped clean from your credit history.

This method takes time and is not for everyone, but if you don’t want to declare bankruptcy, it is an option you have. Talk to a financial professional person if you would like to figure out the best course of action for you and your life style.

All of the time, having credit card debt is easy to do but get away from it can takes a whole of time and work.  Even if you go to an agency or company that specializes in helping people out of debt, it wont happen overnight.  To get out of debt, it will take you quite a bit of time and effort as you get the debt under control and begin the long process of rebuilding your credit.
To properly defend yourself from credit card debt, youll need to know quite a bit about credit, managing your money, and finances in general.  Ordinarily, you can free of debt by managing your ideal budget and save some money whenever is possible.  If you can work this plan then you may avoid credit card debt.

Some people have credit card more than one, such as store credit cards that are known for high interest rates, you should toss them.  If you have a lot of open accounts, you should look into debt consolidation, which will integrate all of your debts into one bill so you can out of debt quicker.  By applying debt consolidation services, you will only have one bill to pay.

When you receive your credit card bill, you must try to pay higher that the minimum payment.  If you only pay the minimum payment, you will end up in credit card debt the whole life – as you could be paying nothing but the interest.  Each month, you better to pay more than minimum amount.  If you pay a lot than minimum payment it will help you to get rid of your debt faster.

It doesnt matter how much your credit card debt is, there is always a way to find financial planners or debt analysts that will help you get back on track.  Even though there are ways out of credit card debt, the best way to get away of it is to keep off it all together.  If you arrange your payment on time – youll always live a debt free lifestyle.

Figures released from the Insolvency Service show how:

• During 2008, 350 people were declared bankrupt in the UK every day
• In the final quarter of 2008, 19,100 people were declared bankrupt – up 22% on the final quarter of the previous year.
• A further 10,000 turned to Individual Voluntary Arrangements (IVAs) to sort out their debt problems
• Thus, the total number of people declared insolvent during the final three months of 2008 was 29,444 – up 18.5% on the previous year
• At present, there are around 110,000 people with IVAs and some 700,000 adhering to other forms of debt management arrangement. Thousands more are struggling to repay their debts as a result of the worsening economic situation, and bankruptcies will increase sharply as unemployment rises
• The Consumer Credit Counselling Service (CCCS) has disclosed that it received more calls to its helpline during the first two weeks of January 2009 than ever before
• 4,607 companies also went into liquidation in the final 3 months of 2008 – a shocking 52% increase on the previous year
• Due to the worsening economy, insolvency practitioners expect to encounter around 158,000 bankruptcies per year for the next couple of years

The UK Insolvency Helpline has just had its busiest period of the year: Richard Sorsky, National Money Advice Coordinator says;

“We are getting 200 to 300 calls a day from people with severe debt problems. By ‘severe’, we mean £20,000 on credit & store cards and other unsecured debts.

Up to three quarters of those calling the UK Insolvency Helpline take the advice given, with more than a third of those being pointed towards either bankruptcy, a debt management plan or IVA, where debts are rescheduled. Other callers opt to re-mortgage or re-schedule their loans – this is becoming increasingly difficult with many lenders withdrawing mortgage products and falling property prices making remortgaging impossible, due to equity disappearing”.

The legal process for going bankrupt may be simple and not carry the stigma it once did, but the implications arising from bankruptcy are wide reaching:

• Once the bankruptcy is passed, your bank accounts will be frozen – the Official Receiver will take charge of your money and property, and when the bankruptcy is discharged (after 12 months), you are technically debt-free
• Declaring yourself bankrupt is a drastic way of becoming debt free, and should only be undertaken if all other solutions have failed
• If you are in employment, the Official Receiver will look at your salary and may take up to 50% of your income to pay off debts – this can last for up to three years
• If you have property, any equity you have in your home will go towards your debts. This may mean having to sell the property or, in the case of joint ownership, you may have to sell your share to your partner or another party
• Even if you do not own your home, any other assets you have will be taken into account
• Although bankruptcy lasts for only one year, a ‘black mark’ remains on your credit file for 6 years, meaning you will find it difficult to get any form of credit, including a mortgage
• You will suffer the indignity of your name appearing in your local newspaper
• Some employers frown upon bankruptcy, such as the police service and the financial sector, with the banks going as far as to consider bankruptcy ‘gross misconduct’, – you could potentially lose your job if you work in this industry and file for bankruptcy.

As can be seen, bankruptcy is not the ‘easy option’ it is often perceived to be. It can be a way out of debt for some, but only when all other options have been exhausted.

It may be way too late at this stage for most financial solutions to be of any practical use. But if you haven’t already looked at other options, first seek advice about alternative ways to rescue your financial situation from disaster. It is sometimes possible to manage bankruptcy via:

• An IVA (Individual Voluntary Arrangement)

• debt management planning

• Refinancing or remortgaging.

• consolidating two or more mortgages

• Restructuring or consolidating your finances

The basic criteria for bankruptcy:

You have a very low or negative disposable income and simply cannot make the repayments you owe on your debts. Your creditors can file against you for bankruptcy if you owe them more than £750. To declare yourself bankrupt, you need to fill in a Bankruptcy Petition. Once this is filed, the court will set a date for your initial hearing, which will decide whether or not to make a formal Bankruptcy Order. If the Bankruptcy Order is made, you are declared bankrupt.

The cost of going bankrupt:

If you decide to go bankrupt, you’ll probably have to pay:

• £335 Official Receiver’s deposit.

• £150 court fee

• £7 charge to swear the Statement of Affairs

Do I have any other options?

Your best bet for a last chance reprieve is via an IVA (Individual Voluntary Arrangements), which involves detailed debt management planning. Get all the information you think you could possible need ready up front to save time and hassle.

What happens if I go bankrupt?

A few key restrictions are held against you until your bankruptcy is discharged, none of which are good news:

• The bankruptcy trustee controls everything you own (your assets)  including your home.

• You can only do business using the name you were made bankrupt under in case you get into trouble again. And you cannot create or manage or publicise a company without the court’s permission

• Under some circumstances your employment can be affected.

While you can open new bank and building society accounts, you are legally obliged to tell them that you are a bankrupt.

What will happen if I need to go bankrupt?

When you go bankrupt you are asked to provide detailed information about your financial situation. You hand over control assets, bank statements and insurance policies to the official receiver and you will probably have to go to court to explain how you’ve got yourself into so much in debt. All of which can be humiliating.

Because you are no longer in control, you are not allowed to make direct payments to creditors during the process. And you are prevented from using your credit cards, and your bank and building society accounts are frozen.

The disadvantages of bankruptcy:

If you’re in a desperate financial position, bankruptcy can begin to seem attractive. But there are plenty of disadvantages.

• It will cost you money to go bankrupt.

• You might have to sell valuable personal possessions like cars and jewellery to help pay people off.

• If you are a homeowner you will probably be forced to sell your home to help pay off creditors.

• Your business will probably be closed down and your employees let go.

• You cannot keep bankruptcy private. Bankrupt people are listed online and cases are often covered in the local paper.

• Even when your bankruptcy is discharged, debts like student loans and court fines can’t be written off… ever!

Life after bankruptcy:

After you are discharged from your bankruptcy, the restrictions and conditions disappear. But your bankruptcy will still be registered with credit reference agencies for up to six years. And even after the six years is up, when you apply for a mortgage you might still have to declare that you were once declared bankrupt.

And you can still have a Bankruptcy Restrictions Order lodged against you if you took on your debts in the full knowledge you’d never pay them back. This can last for up to fifteen years, severely restricting what you can do with your finances.

If you have experienced bankruptcy or know of someone who has become bankrupt we would like to hear about the cycological affects. Please do mention names in your comments.