Bankruptcy is an option an individual in dire financial difficulty would be forced to take. This is considered as the last debt management tool or resort a debtor could ever take because of the stigma that comes with its implementation. Being published in the London Gazette, made available on line and registered, bankruptcy orders have a far reaching effect. Everybody would be aware of your misfortunes. Bankruptcy will stay in your credit record for a period of 10 years. Its lasting effect could be detrimental to future employment and future financial dealings.
Bankruptcy, however, do have some alternatives. A debtor who is aware of his incapacity to pay debts as they become due should consider entering into a compromise with the creditor and have an informal arrangement to schedule payments. But as it is informal and not legally binding, the creditor on a whim, could renege on the arrangement and demand the full payment of the debt.
Another alternative is the administration order. Instead of paying directly to the creditors, this court-based procedure would require the debtor to make regular payment to the court. However, this is only applicable to debts not more than