Making forced bankruptcy harder

A much needed law change happened on the Ist October 2015, that went pretty much unnoticed.

Did you know that before that date, if you owed a creditor as little as £750, they could apply to the courts to make you bankrupt?

Implications of bankruptcy

– Any assets such as your car or home could be sold to pay back the debt.
– It will remain on your credit file for 6 years, meaning you will find it extremely difficult to obtain credit, loans or a mortgage.
– You will not be able to act as a company director.

Bankruptcy was meant to be a last resort, for people or companies that were insolvent to the point of being unable to pay their debts, debts that were usually a large sum of money owed.

Unfortunately some took advantage of this situation, and the mere threat of applying for bankruptcy from a creditor to a debtor over as little as £750 was enough to cause serious implications and further financial hardship.

As of 1st October 2015, the law has now changed and the amount of debt you would need to owe before anyone can apply for bankruptcy against you, is now a more realistic £5000.

A welcome change.

For further information on bankruptcy in the UK Stepchange.org

Know your credit score

Based on your financial history, a credit score is what companies will look at in order to help them in their decision on lending you money, wether you are ‘credit worthy’.

It is not just the big ticket items such as mortgages and loans, but also credit cards, new phone contracts and even insurance, all require companies to look into your credit score. It is therefore important for you to maintain a good credit rating through life.

Negative Points

1- County court judgements, bankruptcies.
2- Being late paying bills, credit cards.
3- Applying for too many loans, mortgages, credit at the same time.
4- Moving home a lot.

These above, are just some of the big red flags to credit scoring companies.

How to Improve Your Score

1- Pay your bills on time, set up direct debits.
2- Get on the electoral register, and keep your contact details consistent.
3- Until you have improved your financial situation and credit score, stop applying for further credit or loans.

There are 3 main credit agencies that supply your credit reference. By law you have the right to see your credit report. There may be a small fee to view your report.
Experian
Equifax
Noddle

Mistakes

Sometimes agencies make mistakes, if you see a mistake on your report, contact the agency, by law they have 28 days to either correct the mistake or mark it as disputed which means lenders are not to rely on it when credit referencing.

It is important that you view your credit report and make sure it is accurate and up to date.