An option for sorting out your debt problems might be bankruptcy. You can apply for bankruptcy if you cannot pay back your debts.
As well as applying for bankruptcy yourself, someone else you owe money to (a creditor) can apply to make you bankrupt, even if you don’t want them to. For a creditor to make you bankrupt, you must owe at least £5,000. You can apply to be made bankrupt online.
There is a one off payment of £680 if you apply yourself.
Advantages of going bankrupt
When the bankruptcy order is over you can make a fresh start - in many cases this can be after a year. Other advantages of going bankrupt include:
you no longer have to deal with your creditors
you are allowed to keep household goods and a reasonable amount to live on
creditors have to stop most types of court action to get their money back following a bankruptcy order
the money you owe will be written off once your bankruptcy ends
Disadvantages of going bankrupt
if you have surplus disposable income, you may be asked to make payments towards your debts for a period of 3 years
it will be more difficult to take out credit while you are bankrupt and your credit rating will be affected for 6 years
if you own your home and you cannot raise sufficient equity, the property might have to be sold
some of your possessions might have to be sold, for example, your car if it has a high value (over £3,000) and any luxury items you own
it may affect your employment, subject to your contract of employment
if you own a business, bankruptcy may have severe consequences
going bankrupt can affect future applications regarding immigration status
your bankruptcy will be published on the Individual Insolvency Register
What happens at the end of bankruptcy?
Your bankruptcy will normally end after a year. The Official Receiver will tell you when it is over. Most debts that haven’t been paid will be written off although some debts like court fines and Student Loans can never be written off.
In extreme cases the Official Receiver may apply for a Bankruptcy Restriction Order. This can last up to 15 years and will restrict your financial affairs. This order could be made if, for example, you do not co-operate with the Official Receiver, or you take on debts knowing that you won’t be able to pay them back.
Your bankruptcy will be added to the Individual Insolvency Register. This is a public record. The record is removed after the bankruptcy ends. Your bankruptcy will stay on your credit record for at least 6 years.
Call us today to speak with one of our advisors who can help you understand your options and find out the right choice for you. We're here to help on 0800 019 8383.