There is more to bankruptcy than as a way of finally putting an end to harassing debt collectors and creditors. One big side effect of bankruptcy being that your life is likely to be subjected to intense scrutiny.

These are some of benefits of bankruptcy:

Relieves stress caused by dealing with numerous creditors.

Once a bankruptcy order is made, a third party takes over administration, decision making and payment process of debts.

Creditors forced to recognise that they must accept less money than is owed.

Debtors typically pay less with a bankruptcy order than with an Individual Voluntary Arrangement.

Once discharged, most debts are written off and creditors cannot pursue them.

Here are some of drawbacks associated with bankruptcy:

The debtor will lose any realisable assets of value.

If debtor owns equity in a home, this will almost certainly be sold.

If a business is owned, this could be sold and any employees dismissed.

Bank current accounts can be difficult to obtain.

It is a costly process. All fees for insolvency service, courts and any trustee are taken out of debtor's assets.

Individual: cash-need for major expenses, outlived need for coverage, needing different coverage or features, financial distress

Family / Estate: Change in beneficiaries (e.g., divorce, death of dependents), Second-to-die policyholder (i.e., spouse) has passed away, material change in value of estate

Business: Change in key executives / partners, change in succession plan (e.g., family business) or needing cash / seeking to monetize assets

(Source: Bernstein Research Call, Sanford C. Bernstein & Co., LLC, a subsidiary of Alliance Capital Management, 2005)

Other sources (Milestone Settlements, 2004) confirm that senior life settlements appeal as solutions to individuals most likely to consider a life settlement, because they, for one reason or another, no longer need insurance they purchased. A number of reasons may include: