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I don't understand bankruptcy?

2 replies

Titsinknicks · 27/10/2020 17:01

I thought when you go back bankrupt it's because you can't afford your debts - you're forced to sell any assets to service as much debt as possible and then you basically can't get credit again for years. Or something like that. So why do celebs go bankrupt all the time (often more than once) and get to keep their big houses and afford big holidays? Can I go bankrupt, clear my debts and keep my car and house? What am I missing? Is it actually their limited companies going bankrupt? Someone please explain because I feel very stupid!

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IceCreamAndCandyfloss · 27/10/2020 17:05

I always assumed you sold everything then had a plan to pay back every penny owed to debtors. No future credit and it would show on checks with employers.

I don’t think that’s the case at all though.

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MargotMoon · 27/10/2020 17:18

Yes, lots of self-employed people are limited companies so wouldn't necessarily lose all of their assets if that company went insolvent.

If you personally went bankrupt you may lose your house (but it very much depends on the circumstances) and other assets. You may also have to pay into bankruptcy for 36 months if the Official Receiver determines that you have spare income (Income Payments Order). But you'd also have a fresh start from your debts. If you need debt advice ring CAB or National Debtline.

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