Unfortunately the reasons to go bankrupt have only increased. It used to be that after going bankrupt you would have zero credit rating (ie you coulnt get a mobile phone or anything that requires credit) for 5 yrs but that's now been reduced to 2.
They need to understand that:
- all personal items will be seized. So they will lose all their TV's, DVDs, cars, computers. Essentially anything that isn't essential for living. So they could keep fridge and microwave and 1 car if it was a total shed. All prestige items go.
Onvously they would lose their house as well. you lose EVERYTHING!
- they would not be able to get or do anything that requires credit. In this day and age that probably covers a lot more than they realise, for about 3 years. (2 yrs no credit + 1 yr minimum to rebuild their credit.
- they won't be able to have a credit cards or even visa debits. So everything will need to be paid for in cash or maestro.
I would advise they only consider bankruptcy is they have a personal debt of over £20k and getting worse or if their negative equity outstrips the projected value of their propert in approx 3 yrs.
Bankruptcy is for those with no other option. It's not as bad as it used to be (used to get sent to prison not so many moons ago) but its not an easy ride.