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This guide lays out the consequences of going bankrupt in very simple, understandable language. While going bankrupt may not be the end of the world, it has serious consequences. The following points will help you understand the consequences of filing for bankruptcy:

• For a minimum period of three years, you will remain bankrupt. In addition to that, the trustee in charge of the bankruptcy has the right to extend your bankruptcy by up to five years. In all likelihood, your bankruptcy may last for seven years.
• Your name will be accessible and visible in the NPII (National Personal Insolvency Index). This means your information will be available for the coming seven years in the system of commercial credit references.
• You will have to notify all your creditors of your bankrupt position so the next time you wish to apply for a line of credit, the creditor will know where to set the amount limit. In case of failure to inform on your part, the other party is allowed to press criminal charges.

 

• In the case you desire to purchase items from a seller or any trade services, you will be required to notify the seller of your bankrupt status. Failure to do so may lead to criminal charges against you.
• No bankrupt party is allowed to be the director of any company without the written permission of their trustee. Failure to obtain permission may result in criminal charges.
• In case of bankruptcy, you will not be allowed to hold specific public positions without the written permission of your trustee.
• It is mandatory for the party that is bankrupt (i.e. you) to inform the authorities of any aliases being used for informal and formal work. This involves business partners and other deals that work with and for the bankrupt party. In case of failure, criminal charges may be pressed.
• It must be remembered that any household item or tool you use in aiding you to earn an income may not be sold by you in case of bankruptcy. All your other assets, along with your residence, will be forfeited to the trustee.
• Without the permission of your trustee, you – as a bankrupt party – will not be allowed to travel abroad. You may have to surrender your passport if the trustee requires it.

 

• Obtaining employment might be an issue. Companies often reject employment applications submitted by parties with bankrupt status.
• A certain kind of contribution might be required from you in case of bankruptcy. If you are employed and earning an income, the trustee may require you to give a share of your income. This is given over to the creditors to whom the bankrupt individual owes money. In case of no cooperation, the trustee is allowed to garnish your wages.
• You may also face lots of difficulties in borrowing money, buying items on credit, opening new insurance policies and renewing existing insurance policies.
• A bond may be required of you, as a bankrupt party, before you can open certain accounts. Certain companies require this measure, including equipment rental companies, electric companies, cellular phone companies, water companies, etc.
• Opening new bank accounts will be a difficulty for you as a bankrupt party.

 

 

• You will also need to remember that your trustee may take control of your bank account. The trustee will use the money present in your account to pay off the creditors in order to clear your debts.
• Banks will restrict your usage of money from your own bank account in order to ensure that you do not overdraw.
• Any sort of inheritance obtained or received by you before going bankrupt will be paid to the trustee to contribute towards clearing your debts which you owe to your creditors. In case your inheritance exceeds the amount to be returned, the remaining amount will be returned to you by the trustee once your bankruptcy period is over.
• You cannot apply for more credit during bankruptcy. It also affects your immigration status.
• Your business will be shut down after going bankrupt.