Bankruptcy and Credit Cards
Many people get into vast amounts of debt on their credit cards these days. Some people get into so much debt on their cards that they can no longer afford to pay their monthly minimum payments.
These people may try to get a loan to pay them all off and therefore only have a one payment to pay each month at lower interest, but many people in real financial difficulty will find it very hard or impossible to get a loan.
People who are in this much debt on their credit cards often resort to bankruptcy. This has been made much easier since the change of laws introduced in 1 st April 2004.
Now if you have an unsecured debt of over £750 you can submit a petition to be declared bankrupt.
The bankruptcy used to stay with you for 2-3 years, but since the change in laws it now only stays with you for 12 months. This has led to a huge increase in the number of people declaring them selves bankrupt.
These changes were introduced to help business men and women who had been made bankrupt easier for them to get back into business. Unfortunately it has been used more by consumers who have large amounts of debt to clear this and start a fresh. This of course will be abused by dead beats and people who have no intension of paying their debt while they accumulating them. This extra cost to credit card companies and banks will of course be passed onto consumers most of which are honest and pay their debts.
Credit cards make it easy for people to get into debt and they are probably the main reason for this rise in consumer debt.
Many people who get into huge debt on their cards feel that bankruptcy is the only way out, but it is not. There are usually other alternatives. Seek advice from your local Citizens Advice Bureau. Once you go bankrupt you will no longer have control of your finances while the bankruptcy procedures take place. You will probably not be able to borrow any money from a bank for at least 12 months.
The advantages of going bankrupt are you will no longer be required to pay your credit cards and other loans off. This will give you a fresh start with your finances.