The details in this article are for England and, Wales and Northern Ireland residents only.
Some of your insurance policies might be affected during your bankruptcy. Thus, you must need to know what will be the pros and cons before you claim going bankrupt. This is done to anticipate adverse impact and find out if you are still covered.
How will bankruptcy affect my current insurance policies?
While you think that bankruptcy may be the best debt alternative, you should understand that some insurance coverage or policies can be canceled. Usually, this applies when paying monthly installments for the policy.
If you are declared bankrupt, insurance coverage can be canceled altogether. In some cases, you will be asked to pay your balance for the entire year within the given period. If you fail to pay for the whole year balance, your policy is likely to be canceled.
Below are some of the insurance coverage that you need to check when going on bankrupt:
- You may have to check policies that fit your financial status esp. when you are self-employed. Besides, you also have to look at the details on public liability insurance.
- If you own a car, you are most likely to have vehicle insurance. This is because you can only be permitted to drive in the presence of a valid insurance policy.
- You must also check building and content insurance.
Even though your insurance is paid for the entire year, still you need to check and find out more about the details of your policy before you enter the state of bankruptcy.
What will I do if my insurance is canceled?
There are several options for you when you go on bankrupt and decide to pay the remaining fees of your policy for the rest of the year.
- You can pay the remaining installments of your policy within the period provided by the insurer while going on bankrupt. This can be more feasible if the monthly fees are not costly. In contrast, this can be draining on your end of you are paying a huge amount on your policy each month.
- You can delay bankruptcy to lessen the amount that you need to pay to your insurer after your bankruptcy discharge.
- If you can no longer utilize your policy, there is nothing more that you can do. This is common for vehicles that are no longer used, or an end of contract from employment.
Can I get a new insurance policy when I declare bankruptcy?
Since it takes one year for a bankruptcy discharge, there is a need to renew your policies within this period. When you do, an insurer can see your bankruptcy record as it will reflect on your credit report. Besides, getting a policy will be more difficult as this can be seen by insurers.
Moreover, when paying for your policy through installments, you need to inform the company pertaining to your bankruptcy. This is a must if you are paying over £500 each month on your policy. This amount is mostly perceived in a vehicle insurance policy. If you refuse to divulge the information about your bankruptcy even if not in question, you can be held liable for a criminal offense.