Bankruptcy advice

Bankruptcy helps you deal with debts that would otherwise take years to clear. Our advice can help you understand the risks and restrictions you might face during bankruptcy.

This solution is only available in England, Wales and Northern Ireland. Bankruptcy in Scotland works differently and is often referred to as sequestration.

Watch: An introduction to bankruptcy

Benefits of bankruptcy

  • It can be one of the quickest ways to give yourself a fresh start.
  • Your unsecured debts are written off.
  • You will receive no further contact from your creditors.

Risks

  • If you have any assets, like a house or car, these may be included in your bankruptcy.
  • It may have implications for your job – for instance you will not be able to act as a company director.
  • You may find it difficult to take out credit, as bankruptcy will remain on your credit file for six years.

Important information about bankruptcy

Bankruptcy should not be taken lightly as it is a big step and any assets you own (e.g. car/house) will usually be sold. Bankruptcy will also be registered on your credit history for six years and could affect your job.

In some cases, you are asked to make monthly payments towards your debts from your available income. This is known as an income payment agreement, and can last for three years.

You should always get expert advice before making the decision to go ahead with it.

Is bankruptcy suitable for me?

Bankruptcy is a form of insolvency and is normally only suitable if you can’t pay back your debts in a reasonable time. Assets you own, such as your house or car, will usually be sold to pay off your debts. This means if your assets are worth more than your debts, or if all of your regular payments are up to date and you can afford to keep paying them, bankruptcy is unlikely to be the best option for you.

Unsecured debts include things like credit cards, personal loans and store cards.

How does bankruptcy work?

If you make yourself bankrupt your creditors write off your unsecured debts. This allows you to make a fresh start. Personal bankruptcy normally lasts for a year.

You can’t borrow any further money during this period and have to declare any changes in your circumstances to the official receiver.

You may be asked to sell valuable assets but you’re able to keep the things you need for day-to-day living.

How much are bankruptcy fees?

Bankruptcy fees vary throughout the UK. In England and Wales you pay a £130 fee to the adjudicator and £550 to the official receiver, a total of £680.

In Northern Ireland the bankruptcy fees are £647. You pay a £127 court fee, a £525 bankrutpcy deposit and a £7 solicitor's fee.

If you have a low income or receive benefits you may be exempt from the court fee, allowing you to go bankrupt for £525.

There are several types of bankrutpcy available in Scotland, these include:

 

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