Brutal price of the failed dream

Bankruptcies will continue at a high level into the next century, says John McQueen, who helps those who experience it to cope with their trauma

Barely a decade ago, only a few thousand people a year went into bankruptcy. Over the past five years, however, between 20,000 and 30,000 people do so each year, victims of the all-too recent collapse in property prices and the last recession.

Despite the recovery, bankruptcies are expected to remain at these high levels to the end of the century and beyond, caused mainly by the increasing numbers of people who start businesses because of the lack of "real" jobs.

Bankruptcy laws in the UK are harsh. Other than being left with the tools of their trade and basic household possessions, bankrupts are stripped of all their property. Their homes, even if jointly owned, can be sold to realise the bankrupt's share of the value of any equity in it.

A bankrupt is held in bankruptcy for at least two years, usually three. During this time anything earned above a strictly-defined limit must be paid to the trustee in bankruptcy.

During the period of bankruptcy, any inheritances or other windfalls would also go to the trustee. Some kinds of pensions can be attacked and life policies of the bankrupt will be cashed in. Cars worth more than pounds 500 will be seized.

In addition, a bankrupt will find it impossible in most cases to obtain a bank account, although it is possible to open savings accounts in building societies. Credit is hard to obtain for a bankrupt or his family for eight years. A bankrupt is not allowed to obtain credit of more than pounds 250 from any individual creditor while bankrupt, unless the creditor agrees.

The humiliating aspect of bankruptcy means many people go to extreme lengths to avoid it, sometimes causing themselves more damage in the process. There are many rogue debt advisers around who counsel people into expensive and painful "voluntary arrangement" procedures which, more often than not, fail, with bankruptcy ensuing.

In many ways, the complex financial needs of people in the 1990s mean that bankruptcy is probably a bigger nightmare now than it would have been 100 years ago. This is because in the last century few people owned their homes or required banking facilities and other modern financial services and products. Bankruptcy law remains primitive.

Most people who go bankrupt are middle-aged business people, often with families. They face emotional trauma as well as the loss of the result of a life-time's work. They then often find themselves deserted, even by family and friends.

I founded the Bankruptcy Association in 1983. We have grown since then and we now have nearly 3,000 members. We provide a friendly face to turn to for people either facing the prospect of bankruptcy, or going through it.

We provide a national telephone helpline service, as well as seeing people face-to-face when necessary. Members also receive a quarterly newsletter. We campaign for changes in the law and act as a watchdog over the Insolvency Service and other insolvency practitioners, although 95 per cent of our time is spent offering advice and help. We are primarily concerned with offering practical helpn

John McQueen is founder and chief executive of The Bankruptcy Association of Great Britain and Ireland.

The Bankruptcy Association's inquiry line numbers are 01482 658701 and 01524 64305. Membership of the association is open to anyone and cost pounds 15 per annum. Further details from: The Bankruptcy Association, FREEPOST, 4 Johnson Close, Abraham Heights, Lancaster, LA1 IBR.

`Bankruptcy Explained', by John McQueen covers the effects of bankruptcy laws in all parts of the UK. The book is available from the above address for pounds 7.95 (P&P included).

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Neil Pavier: Management Accountant

    £45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

    Sheridan Maine: Commercial Accountant

    £45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

    Laura Norton: Project Accountant

    £50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

    Laura Norton: Project Accountant

    £50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

    Day In a Page

    Is a quiet crusade to reform executive pay bearing fruit?

    Is a quiet crusade to reform executive pay bearing fruit?

    Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
    The King David Hotel gives precious work to Palestinians - unless peace talks are on

    King David Hotel: Palestinians not included

    The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
    More people moving from Australia to New Zealand than in the other direction for first time in 24 years

    End of the Aussie brain drain

    More people moving from Australia to New Zealand than in the other direction for first time in 24 years
    Meditation is touted as a cure for mental instability but can it actually be bad for you?

    Can meditation be bad for you?

    Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
    Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

    Australia's first-ever Eurovision entrant

    Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
    Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

    Laughter, but no tears, as Letterman takes his bow after 33 years

    Veteran talkshow host steps down to plaudits from four presidents
    Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

    Hozier's 'blasphemous' song takes Novello award

    Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
    Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

    Join the tequila gold rush

    The spirit has gone from a cheap shot to a multi-billion pound product
    12 best statement wallpapers

    12 best statement wallpapers

    Make an impact and transform a room with a conversation-starting pattern
    Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

    Paul Scholes column

    Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?
    Season's finale brings the end of an era for top coaches and players across the continent

    The end of an era across the continent

    It's time to say farewell to Klopp, Clement, Casillas and Xavi this weekend as they move on to pastures new, reports Pete Jenson
    Bin Laden documents released: Papers reveal his obsession with attacking the US and how his failure to keep up with modern jihad led to Isis

    'Focus on killing American people'

    Released Bin Laden documents reveal obsession with attacking United States
    Life hacks: The innovations of volunteers and medical workers are helping Medécins Sans Frontières save people around the world

    Medécins Sans Frontières's life hacks

    The innovations of volunteers and medical workers around the world are helping the charity save people
    Ireland's same-sex marriage vote: As date looms, the Irish ask - how would God vote?

    Same-sex marriage

    As date looms, the Irish ask - how would God vote?
    The underworld is going freelance: Why The Godfather's Mafia model is no longer viable

    The Mafia is going freelance

    Why the underworld model depicted in The Godfather is no longer viable