Mortgage
Lending to an Ex-Bankrupt
A
bankrupt is a person due to extreme money problems
and non servicing of their debts has surrendered
all their assets by order of a legal court and
then being excused of paying off their debts
due. This usually entails that they are no longer
for a given period recently reduced to one year
from three years unable to have credit for example
loans, a mortgage or have a normal bank account
(Restrictions will normally be made). Past debts
may still have to be paid in some circumstances
even after being discharged for example this
is applicable when concerning non payment to
the inland revenue.
Some
professions bodies may not permit a bankrupt
to conduct certain professions for example an
accountant. The bankrupt must disclose their
bankruptcy to anyone they trade with. This potentially
may give a bad name and has an onerous stigma
attached to it. Credit ratings will be low and
when new debt is taken out the bankrupt will
pay a higher interest rate as the loan is regarded
as higher risk. There are very few lenders whom
would lend immediately after being made a discharged
bankrupt. Bankruptcy will be conducted by a
legal firm.
Individual
voluntary arrangement or IVA
This is where an insolvency practitioner with
a court order will draw up a individual voluntary
arrangement with the lenders and people whom
are owed money from the borrower who has been
unable to service their debts. It is similar
to a bankruptcy but regarded as no quite so
bad as being made bankrupt. And quicker to implement.
However
an IVA will still get a bad credit rating that
will effect their ability to borrow money. The
advantage is a professional may continue and
bank accounts will normally be granted. But
still not a desirable position having a poor
credit history.
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