You might be able to declare yourself bankrupt if you can’t pay your debts and the amount you owe is more than the value of the things you own.
The bankruptcy period usually lasts 12 months. If you go bankrupt, most of your creditors won’t be able to contact you about your debts or take you to court.
You’ll need to pay £680 if you decide to apply for bankruptcy.
You can pay in instalments, but you’ll need to pay the whole amount before you submit your bankruptcy application.
If you’re struggling to raise the bankruptcy application fee, you might be able to apply for a grant or get help from a charity. You can search for a grant on the Turn2us website.
If you have spare income
If you’re earning and have a small amount spare, you might be asked to make payments towards your bankruptcy debts.
Advantage Of A Bankruptcy
- You may be debt free in just 12 months – You will usually be bankrupt for a year and at the end of this you will be effectively debt free
- You won’t need to deal with your creditors – You’ll no longer need to speak to your creditors about your debts and they won’t contact you for payment again.
- You won’t have to give up all your belongings –Only your possessions of substantial value will be used to repay your debts, including your home or a high-value vehicle.
- Any court action taken against is likely to be stopped – There’s a very high chance that any court action being taken in relation to your debts won’t go ahead if you are made bankrupt.
- You can stay in your rented home – Unless your tenancy contract explicitly says you cannot stay there if you have been made bankrupt
- Creditors can’t take any further action against you
- It won’t affect your partner unless you have joint debts
Disadvantages Of A Bankruptcy
- You won’t be in control of your assets or finances –
- Your bank account may be frozen –
- You may lose your home – To release equity to pay your creditors, your home may need to be sold.
- You may not be able to work in certain professions – Some industries do not allow bankrupt individuals to work in them
- Your bankruptcy will be made public – your bankruptcy will be listed in financial paper The Gazette, as well as on the Insolvency Register.
- If you have joint debts, the other person will become solely responsible – This means creditors will chase them for payment and they will be wholly responsible for what is owed.
- You will have to abide by a number of strict restrictions – These include being unable to borrow more than £500 credit without disclosing to the lender that you are bankrupt and being unable to manage a business or act as a director of a company without the permission of the Court.
- You may have to make monthly payments to the bankruptcy if you have disposable income – Your Official Receiver will review your finances, and if after all of your income and expenses you have any disposable income, this will need to be paid into an Income Payment Agreement (IPA). This can last for up to three years.