As a current airline pilot and a discharged bankrupt I can probably contribute quite a bit here. Here is my story. Prior to jumping in boots and all with my training about five years ago I worked out a financial plan. I figured that by using about £10,000 of my personal saving and an intricate series of 0% APR balance transfers on credit cards I could pay for my training and pay the loan back too. This was based on spending time working as an instructor and finding a reasonable 25k(ish) turboprop job within a couple of years of finishing training. If this did not work out then I knew that with unsecured debt, bankruptcy would be a severe but sensible way out of decades of debt misery. Having that fall back plan was a good move with retrospect.
Just about anything that could go wrong did go wrong and I didn't budget for the dreaded SSTR that was not around when I started training. By January 2007 I found myself unemployed, with 50k of unsecured credit card debt and due to my worsening situation my lines of credit had dried up and the walls were closing in on me. Going bankrupt was my only real option as within a few months my cashflow situation would have made things impossible.
I filled in various forms and submitted them to the insolvency service. Then I booked a date with the local court to declare myself bankrupt a few weeks later. Going bankrupt entailed several hundred pounds of court fees which I obtained by one last cash advance “loan” from the credit cards. This was my first time in court and it was scary. The forms were examined in a side office and the payment was taken. I waited to be called in to see the judge which was terrifying. The court itself was quite large and it was just me and her. She asked me to confirm my circumstances and if I understood what I was doing and then declared me bankrupt.
A few days later the Official Receiver (OR), called to discuss my case. I was examined in great detail over an hour long phone call to determine if I had been “reckless” in my financial undertakings. The OR determined that my intentions had been honorable and I would not be given a Bankruptcy Discharge Order which could have extended my period of bankruptcy. I was told that I could keep my £1500 car as I needed it to find employment. It's often said that you can't get a bank account after bankruptcy; nonsense! I opened up a basic account with the Nat West prior to going bust and this came with a cash card but no overdraft. The OR kept this account open in order to have my Job Seekers paid in. My creditors were informed by the OR and very few called me. They have no legal right to collect the debt themselves as this is the job of the OR.
The real problem was obtaining work and the implications. If, within the one year period of bankruptcy you obtain a job then you will have an Income Payment Order (IPO) attached to you for three years. Get that nice 50k jet job and 75% of your disposable income can be given to your creditors. Obviously this is a BIG issue that has not been mentioned here already. I got around it by finding a job abroad for most of 2007. This avoids the dreaded IPO and I wasn't earning big anyway.
By 2008, I obtained an airline job. There were no questions at the interview about this and my employer does not know and would not give a damn anyway. I've held five airport passes over the years and the bankruptcy has not been an issue here. By early 2008 my bankruptcy had been discharged, but there are still major implications. It is still hard to get mainstream credit. The record of the bankruptcy remains for five years after bankruptcy. Until then getting a mortgage will be difficult though it is possible after a few years. Obtaining a credit card is tricky too. Try hiring a car or going on holiday abroad without one. I did get one earlier this year with a 50% APR so of course I pay it all off every time and my credit rating has improved to the point where I can obtain a normal credit card again. Company credit cards by the way are no problem, even if you are bankrupt as it is the company that is responsible for paying them.
Bankruptcy was a good option for me but it is not a game and needs to be taken seriously. However, if you are 80k in debt with no sensible income and have unsecured loans it is the way to go.