If you are in a situation where you cannot manage one or more debts and your creditor is chasing you for their money then there are various options that they can take. One of these is having you declared bankrupt in the hope that this will release the money that you owe them.
Having a creditor start bankruptcy proceedings against you can be a frightening experience. A lot of people simply believe that they have no option here but to let the bankruptcy go ahead, even if this is not what they want to do. After all, being declared bankrupt could see you lose your home and your possessions to repay your debts.
The fact is that you don’t have to take this lying down. There are ways of halting this process before it reaches the bankruptcy stage. But, you may need to move quickly. Let’s take a look at what you can do.
- Negotiate with your creditor
Bear in mind that your creditor will have to pay to make you bankrupt and they won’t then have any guarantee that they’ll get their money back. If you can come to some arrangement with them then they will most probably be more than happy to stop proceedings against you. You could, for example, offer a series of regular repayments at a level you can afford.
- Stop the Statutory Demand
Before a creditor can have you declared bankrupt they need to go to court and have a statutory demand raised against you. They can only do this if you owe them over £750. If you can lower your debt with them to below this amount then they cannot even start the process so this is another option worth looking at.
- Find another debt management route
If you really don’t want to go down the bankruptcy route then you could look at finding another way to repay what you owe to pre-empt your creditor from having you declared bankrupt in the first place. You could, for example, try and take out a debt consolidation loan so that you can pay them off. Or you could try to set yourself up with an IVA. This process is kind of like bankruptcy but it doesn’t come with the stringent conditions that could see you lose your home. If you can get a certain percentage of your creditors to agree to an IVA solution then all of your creditors have to toe the line. They can’t have you declared bankrupt as long as you stick to your IVA conditions.
The best advice here is to get some advice from a qualified and impartial debt management advisor. You need to do this as soon as you to try and stop your creditor taking action against you. Most will be happy for you to come up with an alternative solution if it means that they will get enough of their money back.
Bear in mind that there is no need to panic here either. You do need to take action but there is no point worrying about what might happen. Most creditors will threaten bankruptcy proceedings as a last resort to try and make you pay them back what you owe. The best thing to do here is to talk to them early if you are having problems to avoid going down this route in the first place.