The worst has happened.
You have debts up to your ears but no money to pay them off.
You have no choice but to declare bankruptcy.
It's an awful situation.
But it's not the end of the world.
There are actually a few positives to bankruptcy.
(We'll get into those later.)
And there are plenty of people that can help you get back on your feet.
Take our client, Lachlan - a self-employed fisherman located in the heart of Scotland.
Last winter, he had a dry spell.
A competitor had relocated Lachlan's regular spot, and beat him to the majority of the catches.
And you can't be a successful fisherman with no fish, can you?
He had tons of orders, but no product to supply his clients with.
They ended up doing business with his rival instead.
In tears, he phoned us.
He claimed he'd run out of his options and would have to declare bankruptcy.
But he was extremely worried - he'd been doing this all his life after all!
Plus, he had a family to feed!
Luckily for him, we'd recently started working with a Glasgow-based accountant who specialised in debt consolidation.
For a small fee, he showed Lachlan how to budget the money he did have left to afford to refinance.
And it worked!
He ended up being able to pay off his debt AND invest in more-advanced fishing equipment.
Now he gets the first catch of the day!
And he's back to being the top seafood distributor in his town again.
(I wouldn't get my salmon anywhere else.)
Anyway, enough of this carp.
It's scary how easy it is to build unpayable debts.
And it's even scarier when you get a debt collector at your door, trying to take your house away.
But we don't want to let it get that far.
We want to help prevent you from declaring bankruptcy, if we can.
But - if it's too late for that - we can help you back onto your feet again.
Obviously, there are a lot of Scotland-based accountants out there.
And you don't have all day to research and compare them.
Luckily, you don't have to.
I've already done it for you!
Take a look at my top 4 picks for accountants that specialise in bankruptcy.
|Company||What's So Great About Them?||Rating|
Wylie & Bisset
Offer A Free Financial Health Check
Hogg & Thorburn
Always Treats Insolvency As A Last Resort
Prioritise Recovery Above All Else
FD Debt Solutions
Free Insolvency Advice
Okay, now you've taken a look at that, let's explore each company in a little more detail.
Wylie & Bisset
Wylie & Bisset pride themselves on the free insolvency advice they give their clients.
Whether you're in arrears, or being bullied by creditors - they're here to help.
They fine-tune their suggestions to your business and circumstances.
Plus, they know that time is of this essence in these situations, so aim to get back to you as quickly as possible.
And did I mention that they also offer you a free financial health check?
They do this to assess just how bad your financial situation is, and how they can help to fix it.
Hogg & Thorburn
If you're facing bankruptcy, but really don't want to…
(Okay, no one wants to - but some people aren't THAT fussed with it.)
Hogg & Thorburn is the place to go!
They go above and beyond to ensure that insolvency is the last resort.
They prefer to work on preventative bankruptcy measures, to ensure you have lots of options to get out of debt.
But, even when you're balancing on the knife's edge, they don't give up.
If you do end up having to file for bankruptcy though, they'll walk you through everything you need to do.
And try and help you back on your feet after!
Scott-Moncrieff work alongside all the higher-ups (like lawyers and bankers) to ensure they can produce the appropriate plan to help you!
They prioritise the recovery of your business, and go above and beyond to get you trading with a positive cash flow again.
From corporate turnaround to voluntary arrangements, they cover all the best options available to you!
If you are declared bankrupt though, they'll supply you with a team of people to get the process completed as quickly and painlessly as possible.
FD Debt Solutions
Whether you want to write off your pre-existing debt, or reduce monthly payments, FD Debt Solutions can provide you with plenty of free, expert advice.
Their website itself is actually full of information about bankruptcy, so you don't even have to call them in most cases.
But if you do want to pick up the phone, they're more than happy to answer ANY question you have.
From how to pay off debts with no money, to the embarrassment you feel when people find out you're broke…
They really do cover it all.
Read More: Wikipedia on Bankruptcy
Bankruptcy should only be a last resort after you've exhausted every other option.
Not sure of what your other options are?
No problem - I've already done the research for you!
There are actually 4 major alternatives to declaring bankruptcy…
And here they are!
A Debt Arrangement Scheme
One of the biggest advantages for struggling business in Scotland, is the introduction of DAS (Debt Arrangement Scheme) by the Scottish government.
You still need to have some funds available, but you will find that paying back what you owe is a lot more manageable.
Firstly, because everything is covered in one payment.
(It's divided between your creditors for you.)
But also because you're actually protected from being taken to court by those creditors.
A money adviser needs to make the application for you, but you can apply to be part of the DAS with any amount of debt.
Of course, there are both advantages and disadvantages to this scheme.
But don't let that put you off, this could still be the best option for you.
You don't have to sell any of your stuff.
Your car, your house, and your stuffed-toy collection remain yours!
Your credit score will be negatively affected.
So, if you're thinking about applying for a mortgage anytime soon, this isn't the way to go.
Your creditors can't take you to court.
Not until your DPP (Debt Payment Programme) is over anyway.
But your debts would be paid off by then, so they'd have nothing to summon you for. Yippee!
You still have to make regular payments.
And they can span over a long period of time.
So, if you have no funds or don't think you can keep up payments for that long…
I'd suggest looking into some of your other options.
Your interest is frozen.
That's because you'd never be able to pay your debt off if you had to pay interest as well!
It's ridiculously hard to borrow money while you're on a DPP plan.
So, think again if you want to obtain a loan to pay off your debts.
A Trust Deed
Think of this as a promise.
You're promising to pay off as much debt as possible, as long as your creditors promise to write off the remaining debt at the end.
In return, your creditors (if the majority of them agree to these terms) are promising to not take any further action to recover the remainder of the money you owe them.
If a majority of your creditors agree, this promise is binding and NONE of them can chase you.
If a majority disagree with these terms, you're still responsible to pay up if any of those lenders demand you too.
Again, there are both advantages and disadvantages to this.
You can apply for a moratorium. This means that for 6 weeks, no legal action can be taken against you.
This gives you plenty of time to sell enough stuff to raise some funds to pay towards your debt.
Your credit rating will be negatively affected for 6 whole years.
Which makes it near-impossible to secure loans when your agreement is over.
You can still borrow money.
So, if you want to take out a credit card to cover daily expenses when your incoming is suffering, you can!
Just try not to rack up mounds of debt on your card too.
You have to sell your stuff.
Obviously, no one wants to have to do this…
So, avoid trust deeds if the only assets you have worthy of selling is your home or car etc.
Your debts will be cleared!
After 4 years, you'll be rid of the majority of them - and won't have to pay anything back.
You can no longer be self-employed.
If you were self-employed before signing a trust deed, your trustee is likely to sell your business.
After you've paid off your most essential debts, you should (hopefully) have enough left in your budget to pay off your non-priority ones.
You can actually take out a consolidation loan to help cover this!
BUT a lot of creditors want you to take this out against something valuable, like your house.
So I wouldn't suggest it if there's the slightest chance you can't keep up with payments.
Voluntary Agreement With Your Creditors
This is similar to a trust deed.
But it's way more informal.
You're still coming to an agreement to pay off a certain amount each month…
But they aren't bound to it.
They can still change their minds and demand you pay upfront or take you to court.
Whether you pick a voluntary agreement or trust deed is completely up to you.
It depends entirely on the strength of your existing relationship with the creditor.
Before signing any documents or taking out any loans, always make sure you consult with a financial advisor first.
It'll be the most important thing you do today.
As scary as it sounds, bankruptcy isn't the big, bad wolf we've always pictured it to be.
There are actually quite a few advantages of declaring yourself bankrupt!
Of course, there are negatives too…
(And we'll get into them later.)
But I want to show you - as cliche as it sounds - that every cloud has a silver lining.
Protection From Creditors
When you file, creditors immediately have to cease any lawsuits against you. And they can't file new ones until your case has been resolved. They can't repossess any of your property either! They're actually forbidden to even try calling you (or sending you letters.) So, you won't get goosebumps every time your phone rings anymore!
Clear Your Debts
If you owe A LOT of money, this could be very beneficial for you. Most, if not all, of your debts could be completely wiped. And, if they are, you'll never be chased to pay them!
Improve Your Credit
Unfortunately, bankruptcy can affect your credit for up to 10 years. (I know...an entire decade!) But… Because you've cleared the majority of your debts, you're basically restarting your credit with a clean slate. So it's a lot easier to improve it!
Learn The Hard Way
So… You've had a tough life lesson. It doesn't seem great right now...but it could be in the future. For example, it's very unlikely you'll be approved to take out a credit card again. So you'll quickly learn to budget what you have. No promises of “oh I can easily pay that back later.” If you don't have the money, you don't have the thing - simple. Also! If you're facing personal bankruptcy as well, you'll actually be required to take a credit counselling course. So you can learn healthy financial habits!
You Could End Up Losing Some Of Your Possessions
If you can't prove that your property should be exempt from bankruptcy negotiations… It could be seized and sold to pay off creditors. So unless you're absolutely sure that your house wouldn't be up for grabs, don't file just yet! Talk to an expert first.
Say Goodbye To Credit Cards
Not only will it be very unlikely that anyone agrees to approve you for a credit card in the future… Your current card companies will likely cancel the ones you do have as soon as they hear you've filed. They don't want you as a customer if you're never going to pay them - duh. The same applies to mortgages and loans etc. No one will want to give you money again. (Not unless you seriously improve your credit score, anyway.)
Your Insurance Will Probably Go Up
If you are lucky enough to get people to lend to you, your insurance premiums will probably be through the roof. After all, working with you would be a huge risk for them. They need to be sure you're going to pay up!
Job Searches Could Be Harder
If you're self-employed, you wouldn't be able to run your own business anymore. It would either be put in the charge of someone else, or sold. If you need to find a new job following this, a lot of sectors wouldn't consider hiring you. Especially in the financial industry!
Read More: Citizens' Advice on Bankruptcy
Being declared bankrupt is tough.
Not just because it means you lack funds…
But because of the long-term impact it has on your life.
But now isn't the time to bury your head in the sand.
In fact, the steps you follow immediately after filing are essential to shortening the impact and ensuring you never find yourself in this situation again.
I've put in countless hours of research and spoken to some clients who've been in a similar situation to you…
Here are the things they did to get out of this rut:
Find Out What You're Bad At
You need to figure out what you did wrong to end up in this situation.
Did you take out 1 too many credit cards?
Learn how to live within your means.
Did your accountant fudge up the numbers?
Conduct more thorough research when you hire your next one.
Did you lose half of your customers in a short period of time?
Find out why they weren't a fan of your site anymore.
Knowing exactly where you went wrong last time is the key to making sure learn from this experience.
Reassess Your Budget
Unless your reason for bankruptcy was a sudden, unexpected cost - chances are, your budgeting skills were somewhat of an issue.
You need to evaluate your income/outgoings to ensure you always have enough money to pay off your creditors.
If you miss even one of these payments, your credit score will plummet.
Yep, each and every time.
But, if you pay them off, you can start rebuilding your credit!
This is also a great time to start working on putting a little of your income into savings.
So, if the worst does happen, you have spare cash around to either pay people or see you through hard times.
Stop Borrowing Money
It sounds simple, doesn't it?
In theory, it's a great plan.
“I'll borrow £1000 this month to pay that £1000 I owe from last year - then I'll have longer to pay off that new loan!”
In reality, this is how most people end up in debt in the first place.
I'd advise not borrowing any money, if possible, and sticking to a very tight budget until you're out of this mess.
If you feel like you have no other option but to get a loan though, please speak to a financial advisor first.
They can tell you all the options you have, and how to prevent worsening your situation.
Will I Have To Pay Anything If I'm Bankrupt?itle here
You actually have to pay £200 to the Accountant in Bankruptcy if you want to file for it!
Don't worry though - it's a one-off payment.
(And a small price to pay if you do get all your debts cleared.)
Also, until your case is resolved, you'll have to pay contributions towards the money you owe creditors.
That's only if it's deemed you can afford it, though!
Will Debt Collectors Take My Stuff?
That depends on what your stuff is worth.
If, for example, your car is worth more than £3000, it would be sold to pay off creditors.
(Unless there are special circumstances, like it's been adapted to seat a disabled child.)
The same applies for your house.
If there's any equity in it, it'll be sold.
Unless, again, you can prove there are special circumstances that should prevent it from being sold.
What Happens To My Bank Account If I'm Declared Bankrupt?
It's fairly common knowledge that your bank accounts will be frozen whilst your bankruptcy case is ongoing.
But some banks may close your accounts down and not let you bank with them at all after.
This isn't the case for every bank though.
Many of them let you open a basic account - you just can't get an overdraft or borrow any money from them!
Will I Be Sent To Prison?
You're someone who's fallen on hard times - not a criminal!
The only reason you'd be jailed in relation to this, is if you committed a criminal offence.
(Like hiding valuable assets to try and get out of selling them.)
So, as long as you're honest and lawful, you shouldn't have a problem.
There we have it.
Now you know everything you need to about bankruptcy.
From who to call if you're facing it, to how to recover afterwards.
But that's not all.
We want to lighten your load during this stressful time…
We can actually find an accountant for you!
All you need to do is fill out this short form.
Then we can get back to you with up to four top quotes!