The number of bankruptcies created a new record in Wales, England. This is according to the Government Insolvency service report on 1st May 2009. The numbers are projected to increase or stabilize at this high rate. Suddenly, it seems that declaring bankruptcy has become a popular option with the masses to get out of the burgeoning debt trap. However, good debts advice and bankruptcy help must be sought out to blue print the appropriate financial steps.

A person burdened with impossible debts and frustrated with numerous phone calls, posts and mails from collection agencies does decide for the bankruptcy option. There are a number of advantages associated in declaring bankruptcy. The bankrupt person doesn’t have to deal with the numerous creditors and their collection agencies. It is illegal for a collection agency to demand debt payback from a bankrupt person. The debtor has to pay a much less amount back to the creditors if he or she chooses bankruptcy over an IVA option. Once the debtor is released from the Bankruptcy status; most of the debts are written off and he or she can start the life afresh. Also, the new legislature changes in the UK permit a bankrupt person to get discharged of the status automatically after one year, though most of the people remain bankrupt only for six to nine months.

Though bankruptcy seems a lucrative option, there are down sides to it as well. A popular misconception about bankruptcy is that it cancels out all the debts. This is not the case. A bankrupt person has to repay the student loan, alimony, law suits, secured credits and child support payments. In case of a bankruptcy, the applicant looses all his or her non essential assets. This includes the applicant’s home, and automobile if costing above 2000 Pounds. A bankrupt person is legally not allowed to run any business. Though a person is released from bankruptcy status; the bankruptcy entry remains on the credit file for six years. A lender always accesses the credit file of a person before granting a loan and bankruptcy creates a negative impact on them. Getting a loan or credit card becomes next to impossible for a bankrupt person. A good debts advice helps to decide whether bankruptcy is absolutely required for the applicant or not. If bankruptcy is best suited for the applicant, he or she can always have bankruptcy help from a competent consultant.