Bankruptcy is suitable for people who are unable to pay off their debts within a reasonable time. It is a form of insolvency, so your debts must be greater in value than the total value of any assets you own.
How does bankruptcy work?
Bankruptcy writes off all your unsecured debts, allowing you to make a fresh financial start. However, you will be subject to a number of restrictions during the term of your bankruptcy (usually 12 months).
To file for bankruptcy, you must hand your application to the court in triplicate and pay fees of £700: £175 goes to the court and £525 to the official receiver.
You may be exempt from paying the court fee if you receive certain welfare benefits.
You may also have to make monthly payments towards your debts as part of an Income Payment Agreement for up to three years.
How could bankruptcy affect me?
Bankruptcy could have significant consequences for both your personal and professional life. You may have to sell your home and there could also be an impact on your job, business, car and bank account.
Bankruptcy will also seriously affect your credit rating for six years from the date you are made bankrupt.
Free bankruptcy advice
Personal bankruptcy is a big step to take with serious implications. If you are thinking about making yourself bankrupt, talk to us first and we will help you decide if bankruptcy or an IVA really is the best solution for you.