Do you qualify for bankruptcy? Find out with our free, simple test

Start my free debt test

Bankruptcy - Why There's No Need For Embarrassment

by The Bankruptcy Service

Posted on November 10, 2014 at 10'00 AM

No Need For Embarrassment

It is a natural reaction to the prospect of declaring bankruptcy. Shame. A sense of failure. The feeling you’ve let people down. It’s natural, but it doesn’t mean it is right.

Many people feel there is a stigma attached to those that have taken the path towards bankruptcy and are embarrassed not only at what those they love might think of them, but often are too embarrassed to speak to those that deal with bankruptcies as part of their job. Studies seem to suggest this is especially true with older people.

However, I think the opposite should be the case. Such people deserve credit for meeting their financial problems head-on rather than ignoring their own plight. The process allows them a fresh start and a second chance. It is not something that should automatically be dismissed by so many people. For those struggling with debt that still see the idea of bankruptcy as unpalatable, there are certain facts that may alter your view.

Firstly, bankruptcy is entirely legal, and an effective way to rid yourself of debt that you are incapable of paying. The system was created specifically to deal with such situations. Bankruptcy exists in all democracies for a reason. It provides a safety net for people and allows a fresh start and a second chance for all. The key point for me however is that bankruptcy can help give you and your family something that no amount of money can - peace of mind. Dealing with your debts and formulating a plan for a brighter future not only relieves the stress and burden of debt that hangs around you, but it has a similar effect on those around you. Stress is bad for your health, so dealing with your debts is a way of improving wellbeing. This becomes even more apparent when you consider that filing for bankruptcy will stop most creditors pursuing you.

Part of the stigma attached to bankruptcy is the preconception that those who have taken this path have been reckless, careless and have spent wildly. This is simply not the situation for most bankruptcy cases, and there are many who are forced down this road through no fault of their own, because of bad luck or because of a bad accident or injury. You may be surprised by the list of famous people that history has consigned to bankruptcy at one time or another, and some of the names will make you realise that even many of history’s most successful businessmen, entertainers and sportsmen and women needed a second chance. Renowned tyre manufacturer Charles Goodyear, car manufacturer Henry Ford, Henry Heinz, Tammy Wynette, Jerry Lee Lewis, Meat Loaf, Buster Keaton, Burt Reynolds, Mark Twain, Oscar Wilde, Rembrandt, Handel, Mozart, Abraham Lincoln – the list goes on and on. They got to make a fresh start and the rest, as they say, is history.

There is one other consideration to make as well when making such an important decision – and that is that bankruptcy is, relatively speaking, quite cheap. In the UK you can petition of bankruptcy for the fee of £700. This may not seem cheap, especially as to be in this situation means by definition you are not awash with money, but it is considerably cheaper than other avenues available for dealing with unmanageable debt. What’s more, the other main requirement is to fill in some forms and there is no need for a solicitor.

To make matters worse, there are certain misconceptions about bankruptcy that have seeped into the national psyche. One of the main ones is the idea that by being declared bankrupt you will lose everything, a theory many creditors may well be happy to see spread, as they’d rather debtors paid back what they owed rather than take the bankruptcy route. In reality, there are various assets that cannot be touched, locked-in pensions being a prime example. Other assets that can be kept include a low-maintenance vehicle, household items, clothing and anything needed to maintain an acceptable standard of living.

The other main misconception relates once more to the social stigma of bankruptcy. Many are put off by the fear that all their friends and family will know about the bankruptcy and don’t want to deal with the embarrassment. The truth is, unless you tell them, how would they know? There is a fallacy that exists that those declared bankrupt have their names emblazoned in huge newspaper adverts that all will see. This is not the case, as whilst a bankruptcy is a matter of public record, it will only be listed in selected financial publications and your friends are hardly likely to go searching (and paying) to find out the details of your bankruptcy. What’s more, a person’s partner is not liable for their debts, and the partner’s assets cannot be used to pay off creditors, nor can a bailiff seize items. The exception may be with joint assets.

Finally, whilst filing for bankruptcy will have a negative effect on your credit score, and affect your ability to take out credit for years afterwards, it does not destroy your rating forever. See our FAQ section on the site for more details about what you can and cannot do after bankruptcy proceedings commence.

That is not to say I am suggesting it to all, as an easy route out for all those with debts. Have no doubt that it is a big decision, and it brings with it many restrictions in the subsequent years. You should always explore your options and consider carefully what the best option is for you. Nowadays, there are numerous other debt management options, including Individual Voluntary Arrangements (IVAs) and Debt Relief Orders (DROs). If paying off your debts is achievable, then that is the route you must take. Bankruptcy will damage your credit rating, prohibit you from taking up many public office roles and could affect your employment if you work in the financial sector. The point of this article though is to make clear that you should not shy away from bankruptcy due to shame or guilt – they are not valid reasons to explore an alternative solution. After all, bankruptcy is not a punishment, but a means of making the best out of a bad situation for all involved.

Bankruptcy is a last resort. It is a means of dealing with crippling debts when other options have been exhausted, when it has become clear that you are not in a position to pay back what you owe. It is not something to be pushed at any person with debt. However the key thing is that it exists for a reason and if you have decided that this would be the best option for you, then you should not let preconceptions, social stigma or a perceived embarrassment prevent you from making the right decision and giving yourself the second chance that every person deserves.

Free debt counselling and advice is also available from the Money Advice Service available at: doesn't charge a fee for its bankruptcy service, but receives remuneration from the partners that we work with in order to keep operating. Those partners must charge a fee to the customer to likewise cover operational costs, and this amount will vary depending on the solution offered, and the terms of the parner. For details of these terms, please refer to the website of the organisation dealing with your bankruptcy. Upon application with, we will forward your information on to one of our specialist debt partners. You will then be contacted, and you will be able to explain your case, and expert advice will be offered in order to ascertain the most appropriate debt solution.