Default Vs Bankruptcy

[gaffer]

Your views and opinions please!

Having read various threads on the site regards defaults and the like, I find myself asking the question how bad is a bankruptcy on ones credit rating / worthiness in comparison to a default for instance. Defaults are often referred to as being as bad as CCJ's. Is bankruptcy really going to be that thorn in your side?

In raising this issue, I'm assuming an individual has no assets of value, for example a house or car etc.

I appreciate that Bankruptcy is considered to be at the top of the table in terms of severity, but really how bad is it?

In both instances:

1) the individual will have difficulty in obtaining credit,
2) pay higher rates on any credit that is obtained,
3) both will remain on your file for a period of six years (in the case of a default, six years after it is satisfied i.e. likely to be longer than 6 years).

Having learnt a very good lesson, the bankruptcy does provide a clear and fresh start without overwhelming debt. Hasten to add one is going to be far more financially savvy and prudent in the future.

I'm no aficionado on the topic and throw this open to the community to discuss. All opinions and responses are welcome. It seems to me an intriguing comparison, yet I seem to find no topics on the matter.

[sequenci]

It is FAR too easy to go bankrupt since the enterprise act, however i'm a staunch advocate for it in the right circumstances (usually when people are seriously in debt through no fault of their own - relationship breakdowns etc).

Bankruptcy is a great way to make a fresh start, just watch out for those Bankruptcy restriction orders + Income payment agreements!

AFAIK bankrupcty will destroy your file pretty bad for the 6 years, i know that some credit application forms could ask if you have ever been bankrupt in the past too.

[Man on Top]

Personally i think that bankruptcy is a very easy way out of debt, if you are only worried about your credit rating that is a far less worry than a seriouse debt problem. I went bankrupt under the old rules in July 2002 and was Discharged a few months early in March 2005 when the new rules came into force. i dont know how the receiver monitors a bankrupcy for the one year period, but under the old rules they do keep a tight reign on your spending by only allowing you enough money to live and pay essensial bills. any disposable money left from your income they will take 66% to repay creditors. There are ways around this Also your credit rating the six year period will start when the debt is added to it which will be about 3 months into your bankruptcy. six years soon dissapears as i have only about another six months to go and i can start to clean up my own credit rating. I have managed life very well and have found ways around obtaining the use of a credit card, bank accounts and mortgages, and doing very well for myself now. any questions please ask and i will try and help.

[martinpar]

You're probably right that it doesn't make much difference as far as credit is concerned but there are other factors to consider, depending on your circumstances.
As you said, owning assets is a good reason to make you think long and hard before going down the bankruptcy route.
There are certain things you cannot do while bankrupt, which haven't changed as far as I know. For instance, you cannot be a school governor or stand for election, local or national. One thing that annoys me is that they ask if anyone in the property has been bankrupt when you apply for house insurance which implies that you are some sort of criminal.
Having been through it myself in the days when it was still three years before discharge, I can say that a) It's not easy and b) It's not the end of the world.
In my case I had an IVA which I couldn't keep up and the supervisor eventually made me bankrupt. I hadn't expected it and when the notification arrived in the post, it felt like the end of the world. However, once I had found out some more and had my interview with the official receiver I realised it wasn't so bad. Also, being married, I had my wife and her credit to help us through. In fact, the couple of years I sopent trying to keep up the IVA were really money (and time) down the drain. It has taken a long time to rebuild my credit and I'm only just getting back to a reasonable position now. This is mainly due to my own actions, so if you are in a position where you are earning a decent amount in a steady job after bankruptcy you should be able to get back on the road quite quickly.

All just MHO of course.