Unlike the modern day US views on bankruptcy, the Brits look upon bankruptcy as an extremely humiliating and unfair non-solution to indebtedness. There is a stigma attached to all forms of bankruptcy in the UK that really never goes away from someone who has filed. If you possess any substantial assets, bankruptcy should definitely be considered only as a last resort. The new Enterprise Act is sometimes said to discharge bankruptcies within a twelve month time frame, yet this is rarely experienced.
In the UK, bankruptcy is a very public matter. For years it will be difficult, if not impossible, to obtain a mortgage or get any credit. The bankruptcy petition will be posted in your local newspaper as well as the London Gazette. Your creditors, bank, building society & landlord will all be informed immediately. Any business that you own will be immediately shut down. All future assets including: inheritances, insurance payouts/maturities, equity in property, windfalls, and possibly even pensions will be lost.
Not enough? All of your bank accounts and credit cards will be immediately closed. Anything that you are purchasing on lease or HP will be immediately returned to its owner. The minimum period for bankruptcy is 5 years. This can continue for up to 15 years in cases of repeat bankrupts. Professional and business status will be lost. Also memberships to many societies and associations will also be terminated.
Individual Voluntary Arrangements (IVAs) are the prevalent discourse to bankruptcy. These are legal contracts made with a mandatory 75%+ of your creditors to alleviate financial distress. They stop chasing letters. They bypass court action. They are not made public. Compared to the alternative of bankruptcy, IVAs seem like the way to go, if you happen to be a Brit in financial peril.
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