Bankruptcy is often considered to be the only way to escape the stress of frequent demands for payment from debt collectors, credit card companies and a host of other lenders.

However bankruptcy is not something that should be entered into without a great deal of thought. There are some situations when it can be the right thing to do, but there are other cases when it would be a huge mistake.

The constraints which are put upon you once you are declared bankrupt make it a viable option only in the most extreme of cases. It is often the case that an IVA will be a more suitable solution to severe debt problems, due to the fact that it provides similar relief to that offered by bankruptcy but without the associated severe constraints and additional costs.

These people can be made bankrupt: 

• A debtor who is insolvent can be the subject of proceedings.
• A person can petition their own bankruptcy.
• Creditors can, either alone or jointly, apply for a debtor to be made bankrupt where that debtor owes a minimum of £750.
• The supervisor of an IVA can apply for bankruptcy proceedings against a debtor where they have defaulted on the arrangement.