Bankruptcy, as some of these following case histories attest, can happen to anyone in any walk of life, no matter how much wealth they originally laid claim to. Singer Kerry Katona is unfortunate to have been made bankrupt not once, but twice. Her first filing in 2008, on the heels of her having made a fortune in pop group Atomic Kitten, was a result of her inability to pay the final 82,000 on a 417,000 tax bill. While many ordinary folk would not even dream of earning that much, never mind owing that much tax on it, public sympathy for Ms Katona was high as she showed spirited attempts to pay back her creditors by appearing on Big Brother for a handsome fee. Then, in 2013, she has been made bankrupt for a second time. Her outspokenness on the issue and her robust attitude towards rebuilding her life after bankruptcy are a good inspiration to others facing possible feelings of shame and humiliation.
Those in the worlds of show business and entertainment have the ability to generate large sums of money, but they often amass a lot of debt as well, or get seduced by get rich quick schemes. Westlife`s Shane Filan was 4.5 million in debt when the Irish housing market collapsed and he was declared bankrupt in 2012. Others who have shared this fate include Mike Tyson, Peter Stringfellow, Christopher Biggins and Martine McCutcheon. Even one of the richest men in the world, Donald Trump, has actually filed for corporate bankruptcy four times; although in his case he was more likely outsmarting the American taxman than facing personal financial ruin.
When bankruptcy becomes the only option for personal financial difficulties, these individuals have shown that the way ahead is not always a barred door. In fact, bankruptcy can be the beginning of a whole new better chapter in a life that has been derailed. It can be hard to believe this though at the time of the crisis.
An aspect of bankruptcy proceedings that can be enormously upsetting is the prospect of what may happen to all the provision for the future. The major asset in most people`s lives is their home and sadly, this is not protected. But what about pensions? Surely, if you have been paying into a pension pot for years and years, that money should be safe for your future and not at the mercy of the creditors who will be dividing up the remainder of your pooled assets?
It is an interesting question as the law until recently was unconcerned with HMRC approved pensions and did not count them as part of a person`s estate. Since April 2012 however, this is not necessarily the case. For those 55 and over, at an age when they could potentially draw upon their pension (making it income) then they are at risk. This ruling applies whether or not the individual has drawn from the pension or not. As a general principle, anyone under the age of 55 (retirement age) is still exempt. This change in statute makes it imperative for anyone facing bankruptcy to take professional legal advice on the matter.
Note that this was said to be the ruling with "approved" pensions. A pension scheme considered "unapproved" by the HMRC may be able to be excluded from a bankruptcy estate but this will entail an order to be made by the courts.
This does not apply to the State Pension, which cannot be touched by creditors, whether you are receiving it or not. If, however, you are taking receipt of pension payments from a private pension, those amounts will go towards the calculations as to how much you can afford to pay back on a regular basis.
Whether it is Kerry Katona valiantly determining to carry on and carve out a new career for herself, or anyone of the millions caught in the cross-hairs of the credit crunch; in these difficult times it is highly advisable to seek bankruptcyadvice.co.uk for any who fear they have no other option left but to start over again with a clean slate.