Knowing when to go bankrupt is not easy. It is one of those problems in life that does not have a clear answer. What complicates the decision is that it is 10% financial and 90% personal choices.

 

The financial component of deciding if you should petition for bankruptcy can be determined by looking at your assets to see if they have any value that you could be released by the sale or refinancing of those assets. For example, if you own a home that has appreciated in value since purchase, The growth in value of your home above what your mortgage value is would be an asset that could be accessed through the sale or loan against the property.

 

In all my years I can think of very few people, that by the time they reached the bankruptcy decision, had significant other assets to sell to satisfy debts. However, one couple in particular comes to mind. They lived in a large 10,000 sq/ft house they had purchased when times were good. When they had reached a point in their lives that the income was not sufficient to sustain that life they took a good look at what they had amassed over those years and sold their plane, Persian rug collection, baby grand piano and artwork to reduce their debt.

 

When most people reach the “Do I go bankrupt?” moment they usually have very few assets to worry about. Typically the item that causes the most trouble are cars worth more than £3,000. The court typically views cars of a higher value as extravagant in a time when someone is unable to pay their creditors.