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Avoid Bankruptcy

Avoiding Bankruptcy

No matter what state you or your business’s finances are in, you may well find that there are a few options you can explore before resorting to declaring bankruptcy.

Last resort

Bankruptcy is naturally a last resort, and getting the right advice may well help you to avoid it. Insolvency Practitioners specialise in just this. They can take a good look at your finances and give you advice about the steps that are available to you.

Debt Management

A debt management plan is the first point of action for anyone with serious debt problems. First you need to list all of your debts, working out what their total cost is going to be to you, as well as the cost each month. This acts as the basis for moving forward, handling the debts and hopefully getting on with your life.

Sell your assets

If the debt is overwhelming your finances, you may want to consider selling any assets you may have. This is not necessarily confined to large items worth substantial amounts of money. Depending on the scale of your debts you may be able to take the pressure off by selling smaller items.

Avoid Bankruptcy

Speak to them

Next, it can pay to approach your creditors and see what options they can offer you. It’s in their interests that you don’t end up having to declare themselves bankrupt as they’re more likely to get the debt paid that way. If you contact them and let them know that you do want to pay the debt off but are having trouble, they may well have a procedure in place to offer you an alternative payment plan. However, make sure you check the terms of any plan they offer you thoroughly as usual.

Counselling services

Credit Counselling services can help you to deal with your creditors in these situations, the Consumer Credit Counselling Service being your first port of call. They can help arrange an agreement between you and your debtors, as well as giving you advice.


An additional measure that an Insolvency Practitioner may offer you is an Individual Voluntary Arrangement, which is a formal proposal that you make to your creditors in terms of what you can pay them. In Scotland, there is an alternative to an IVA called a Protected Trust Deed, which performs much the same function and can help to avoid bankruptcy.

Stop the cycle

It may seem to go without saying but if you’re already in financial difficulties, avoid as far as possible getting into further debt, no matter how attractive the terms may seem. Get the advice you need as soon as possible to deal with the debt you already have and take it from there.