What is Bankruptcy?
Bankruptcy is a way of dealing with debts that you cannot pay.
Becoming bankrupt is a very difficult decision and it should only be taken as a last resort but you might want to think about bankruptcy if you have no money to pay your debts, or have so little that it will take you years to repay them but it may cost you up to £680 to go bankrupt.
Once you have been made bankrupt, you don’t have to deal with your creditors directly as this will be done by your Trustee or the Official Receiver as they will make sure that your assets are shared out fairly amongst your creditors.
When the bankruptcy order is over, you can make a fresh start and the money you owe is usually written off. In many cases, this can be after only one year.
FeesYou must pay the court fee and deposit yourself, currently £680 per person (subject to some concessions).
Disadvantages of bankruptcy
- All your assets, apart from those required for a basic standard of living, will be sold. This is likely to, after a year, include your house.
- Any income you have in excess of that needed for your basic needs will have to be paid to your creditors.
- Your job may be at risk: certain trades and professions will not allow you to work when bankrupt.
- You will not be allowed to obtain more than £500 credit unless you first disclose that you are bankrupt.
- Your credit rating will be affected (probably for some time after your bankruptcy ceases) and there may be other restrictions, such as having your bank and credit card accounts closed.
- Your bankruptcy will be publicly available on the Insolvency Register.
- Your credit file will be affected and your bankruptcy will remain on your credit file for at least six years.
Advantages of bankruptcy
- Once the bankruptcy has come to an end, all debts are written off
- Depending on your circumstances you may be debt free in 1 year
Applying for bankruptcy
Applying for bankruptcy is now an online process. You can access this service here