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; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
News
Happy in his hat: Pharrell Williams
people
Arts and Entertainment
Stella Gibson is getting closer to catching her killer
tvReview: It's gripping edge-of-the-seat drama, so a curveball can be forgiven at such a late stage
News
Brazilian football legend Pele pictured in 2011
peopleFans had feared the worst when it was announced the Brazil legand was in a 'special care' unit
News
i100(More than you think)
News
Phyllis Dorothy James on stage during a reading of her book 'Death Comes to Pemberley' last year
peopleJohn Walsh pays tribute to PD James, who died today
News
peopleExclusive: Maryum and Hana Ali share their stories of the family man behind the boxing gloves
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

    Argyll Scott International: Service Desk Analyst

    £20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...

    Argyll Scott International: 2x Service Desk Analyst

    £20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...

    Recruitment Genius: Senior Execution Trader

    £30000 - £250000 per annum: Recruitment Genius: A global Rolling Spot FX, Comm...

    Citifocus Ltd: ACA - Financial Reporting

    £Attractive Package: Citifocus Ltd: Chartered accountant (ACA or CPA), must be...

    Day In a Page

    Homeless Veterans Christmas Appeal: ‘We give them hope. They come to us when no one else can help’

    Christmas Appeal

    Meet the charity giving homeless veterans hope – and who they turn to when no one else can help
    Should doctors and patients learn to plan humane, happier endings rather than trying to prolong life?

    Is it always right to try to prolong life?

    Most of us would prefer to die in our own beds, with our families beside us. But, as a GP, Margaret McCartney sees too many end their days in a medicalised battle
    Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night - is that what it takes for women to get to the top?

    What does it take for women to get to the top?

    Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night and told women they had to do more if they wanted to get on
    Christmas jumper craze: Inside the UK factory behind this year's multicultural must-have

    Knitting pretty: British Christmas Jumpers

    Simmy Richman visits Jack Masters, the company behind this year's multicultural must-have
    Radio 4 to broadcast 10-hour War and Peace on New Year's Day as Controller warns of cuts

    Just what you need on a New Year hangover...

    Radio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
    Cuba set to stage its first US musical in 50 years

    Cuba to stage first US musical in 50 years

    Claire Allfree finds out if the new production of Rent will hit the right note in Havana
    Christmas 2014: 10 best educational toys

    Learn and play: 10 best educational toys

    Of course you want them to have fun, but even better if they can learn at the same time
    Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

    Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

    It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
    Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

    Sol Campbell cries foul at Labour's mansion tax

    The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
    Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

    Sarkozy returns

    The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
    Is the criticism of Ed Miliband a coded form of anti-Semitism?

    Is the criticism of Miliband anti-Semitic?

    Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
    Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

    Ouija boards are the must-have festive gift

    Simon Usborne explores the appeal - and mysteries - of a century-old parlour game
    There's a Good Girl exhibition: How female creatives are changing the way women are portrayed in advertising

    In pictures: There's a Good Girl exhibition

    The new exhibition reveals how female creatives are changing the way women are portrayed in advertising
    UK firm Biscuiteers is giving cookies a makeover - from advent calendars to doll's houses

    UK firm Biscuiteers is giving cookies a makeover

    It worked with cupcakes, doughnuts and macarons so no wonder someone decided to revamp the humble biscuit
    Can SkySaga capture the Minecraft magic?

    Can SkySaga capture the Minecraft magic?

    It's no surprise that the building game born in Sweden in 2009 and now played by millions, has imitators keen to construct their own mega money-spinner