Bankruptcy And Social Stigma

Insolvency can be tough for anyone. Admitting to being unable to meet your financial commitments can be hard. However insolvency no longer means certain bankruptcy, which used to be the case.

The government in the UK have done something about the large amounts of bankruptcy over the last few years by putting in place alternatives that are legally backed. These legal alternatives to bankruptcy are Individual Voluntary Arrangements (IVA) and the Debt Relief Order. There are strict qualification criteria for these schemes and not everyone will qualify, and these people will still be left facing bankruptcy.

Arguably one of the most difficult things about declaring bankruptcy is the social stigma around it. It is often regarded as the ultimate financial failure. Particularly amongst the older generations, who never had the luxury of such readily available credit and therefore rarely experienced debt to the levels it is seen today, regard bankruptcy with much distaste.

Information about those who are made bankrupt is also made readily available to the public, making it impossible for people to hide. Up until very recently, bankruptcy cases would automatically appear in the local press. Those that are considered of ‘particular importance’ to people in a certain area still do. However not every case is published in local press these days. All national cases are still published in London Press, however, and the information about bankrupts is available freely online through the Insolvency Service. Bankruptcy also stays on your credit record for at least 6 years and longer in cases where long term clauses have been stipulated, making it almost impossible for the individual to obtain further credit.

It’s for these reasons that bankruptcy really should only ever be the absolute last resort for those in financial difficulty. It will have long term repercussions, potentially socially as well as financially and is a particularly unpleasant process to go through.

Residents of Scotland seeking an alternative to bankruptcy are not eligible for IVA. The Scottish equivalent are Trust Deeds.

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