Bankruptcy
Learn more about Bankruptcy
What is Bankruptcy?
If appropriate to your circumstances, bankruptcy is a debt solution that can be applied for when no alternative solution is suitable.
If you are unable to pay your debts, you can apply to make yourself bankrupt. This means that your assets will be shared between your creditors. Bankruptcy is a formal insolvency route which can allow you to break free from your debts with some restrictions.
Bankruptcy is a debt solution available to residents of England, Wales and Northern Ireland.
How does Bankruptcy work?
Other people can put you into bankruptcy or you can make this choice yourself. It’s something to be carefully considered.
The three ways you can go bankrupt are:
- You apply for bankruptcy yourself
- A bankruptcy application from a creditor
- By the IVA Supervisor if you fail to meet the terms of your IVA
Benefits and Considerations of Bankruptcy
Benefits of Bankruptcy
- Your Bankruptcy could be discharged within 12 months
- It can free you from the pressure from creditors
- All debts that qualify for bankruptcy are written off
- The stigma of bankruptcy is not what it once was
- The process to make yourself bankrupt is now completed online
- You may be able to keep your house (depending on circumstances)
- The bankruptcy cost of £680 can sometimes be paid in monthly instalments
Considerations of Bankruptcy
- You lose control of finances and assets, the official receiver or Trustee appointed on your case will decide what happens to your valuable assets and finances
- Bankruptcy can affect types of employment under certain circumstances
- It will affect your credit file for six years
- It costs £680, and the protection of bankruptcy won’t be considered until this is paid
- Depending on if you have proven disposable income and employment status, you may need to pay income payments for up to thirty-six months
- Your information will be held on a public register
Bankruptcy Eligibility
If you cannot pay off debts and the amount you owe to creditors is more than the value of the assets you own, you may be eligible for bankruptcy. If you owe more than £5,000 to one creditor, they can also apply on your behalf. To qualify, you must live in England or Wales or if you live outside of the UK, you must have lived or owned a business in one of the two countries in the last three years.
Applying for this formal insolvency arrangement should be a last resort and you should consider how it may affect your home, personal finances and relationships.
Before moving forward with a bankruptcy order, you should check whether you’re eligible for other debt solutions such as an IVA. It should be noted that if you break the terms on an IVA, your Insolvency Practitioner can apply to make you bankrupt.
Bankruptcy FAQs
As with other formal insolvency arrangements, bankruptcy will stay on your record for six years.
You will remain on the public Individual Insolvency Register throughout the 12-month period of your bankruptcy order and for up to 3 months after discharge. Your name will also be added to the Land Charges register which is where lenders can see you if you were to apply for a mortgage.
If you’re the sole owner of a property, HM Land Registry will add you to the register held for that property which may mean that you cannot sell it.
In the US there are three different types of bankruptcy – two for individuals and one for businesses. However, only one type of bankruptcy exists in the UK.
You can submit an online application for bankruptcy. This is then checked by an adjudicator (somebody who works for the Insolvency Service) to see if you meet the requirements for this debt solution. If your application is accepted, you’ll usually receive a confirmation letter within 28 days.
An official receiver is the person who deals with your bankruptcy order once the application has been accepted.
Any debts included in your bankruptcy order are normally cleared. Any debts accumulated during the bankruptcy or that couldn’t be included may still need to be paid after you’ve been released from your bankruptcy order.
After the 12 months, you’ll be discharged from bankruptcy. This ends the bankruptcy restrictions and will release you from the debts you had when the order was made. If any debts were gained through fraud, student loans, court fines, family proceedings (e.g. maintenance and lump sum settlements) or created after the bankruptcy order, these may still need to be paid.
Other Debt Solutions
Solutions for unsecured debts
Debt solutions can help with many unsecured debts including:
Council Tax Arrears, HMRC debt & benefits overpayment
Payday loans, bank loans & overdrafts
Credit cards, store cards & catalogues
Bailiff Enforcement & Debt Collector Action
County Court Judgments (CCJs) & Attachment of Earnings
Creditors in the UK
Overcome problem debt with major creditors in the UK including:
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Service you can trust
We pride ourselves on delivering the highest level of service to help people find a solution to overcome problem debt.
Read real reviews of our service on Trustpilot.
Start your journey today and see which solution suits your needs.
Speak to a debt help expert now on 0161 823 4974 or complete the form to book a call back.
They helped us immensely throughly would absolutely recommend them.
C Garrard, Trustpilot 5*
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Free debt counselling, debt adjusting and providing of credit information services is available. You can find out more by contacting Money Helper.
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