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

Life and Style
love + sex A new study has revealed the average size - but does that leave men outside the 'normal' range being thought of as 'abnormal'?
Bill O'Reilly attends The Hollywood Reporter 35 Most Powerful People In Media Celebration at The Four Seasons Restaurant on April 16, 2014 in New York City
media It is the second time he and the channel have clarified statements
Brendan Rodgers
football The Liverpool manager will be the first option after Pep Guardiola, writes Ian Herbert
Zoë Ball says having her two children was the best thing ever to happen to her
voices Thank you Zoë Ball for saying what all parents are afraid to admit...
Tim Sherwood celebrates after Aston Villa open the scoring against West Brom
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Sales Executive - OTE £40,000

    £15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

    Austen Lloyd: Law Costs HOD - Southampton

    £50000 - £60000 per annum + Excellent Salary: Austen Lloyd: An outstanding new...

    SThree: Recruitment Resourcer

    £20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...

    Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Day In a Page

    Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

    Climate change key in Syrian conflict

    And it will trigger more war in future
    How I outwitted the Gestapo

    How I outwitted the Gestapo

    My life as a Jew in wartime Berlin
    The nation's favourite animal revealed

    The nation's favourite animal revealed

    Women like cuddly creatures whilst men like creepy-crawlies
    Is this the way to get young people to vote?

    Getting young people to vote

    From #VOTESELFISH to Bite the Ballot
    Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

    Poldark star Heida Reed

    'I don't think a single bodice gets ripped'
    The difference between America and Israel? There isn’t one

    The difference between America and Israel? There isn’t one

    Netanyahu knows he can get away with anything in America, says Robert Fisk
    Families clubbing together to build their own affordable accommodation

    Do It Yourself approach to securing a new house

    Community land trusts marking a new trend for taking the initiative away from developers
    Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

    David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

    The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
    Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

    Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

    Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
    With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

    Money, corruption and drugs

    The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
    America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

    150 years after it was outlawed...

    ... America's first slavery museum is established in Louisiana
    Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

    Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

    The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
    Tony Oursler on exploring our uneasy relationship with technology with his new show

    You won't believe your eyes

    Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
    Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

    Moores must go. He should never have been brought back to fail again

    The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
    War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

    The battle for Mosul will unleash 'a million refugees'

    Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn