Bankruptcy:

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Is it the right option for you?

Bankruptcy is one of the fastest options which can help you get rid of any debts you have. Otherwise, it would have taken years to clear. It does have serious implications for your future and should not be taken lightly.

In Scotland, bankruptcy is not an available option. Sequestration is a similar solution, but it is very important to note that it has different risks and benefits associated with it.

Key information:  

One of the options for solving your debts is to declare bankruptcy. The option is available if any person or organization is unable to repay the debts to its creditors. In addition, the creditors that you owe money to can also force you into declaring bankrupt in case you fail to repay the debts within the given time.

 Bankruptcy may prove a viable solution for you if you are unable to pay the debts. This will allow you to overcome the burdening challenges regarding the payments of the debt.
 The creditors will no longer bother you for payments.
 Declaring bankruptcy will result in the safety of any court actions that the creditors have taken or planning to take against you.
 The money owed by you will be written off. However, with declaration of bankruptcy, you are:
 Willing to sell your assets including home, stocks, properties and other viable assets.
 Declaring bankruptcy will cost £680, which must be paid for three years in terms of high income for the compensation of debts. Minimum debt Level to declare Bankruptcy is £750.00.
 Your job and profession will be at risk, as declaration of bankruptcy will not allow further functioning in most cases.
 The bankruptcy details will be published publicly, which can result in the fall of the reputation if you are working with an organization.
Whilst considering bankruptcy, you should also consider the following facts

Bankruptcy information at a glance: 

Pros	Cons
It is one of the quickest ways to give yourself a fresh start.	If you have any assets such as a house or car, they may be included in your bankruptcy.
Any of your unsecured debts are going to get written off.	It could have implications on your job - for instance you will not be able to act as a company director.
You will no longer receive any further contact from your creditors.	As bankruptcy will remain on your credit file for six years, you may find it hard to take out credit.

 

Key information about bankruptcy: 

Bankruptcy should not be avoided as it is a huge step and any assets you ever own (i.e: car/house etc.) will get sold. Bankruptcy will also get registered on your credit history for six years and could potentially affect your job.

In some cases, you are going to get asked to make monthly payments towards your debts from your income that is available. This is known as an income payment agreement and could last up to three years.

You should always seek professional advice before making the decision to go ahead with it. We at Free Debt Helpline do not provide you with any Debt Advice. We can only recommend you to one of our panel partners who are fully qualified to provide you with debt advice.

Is bankruptcy the right choice for me? 

Bankruptcy (like an IVA) is a form of insolvency and is normally only the right choice if you are not able to repay your debts within a reasonable time. Whatever assets you own such as your house or your car, will usually be sold to pay off your debts. This means if your assets such as a house or a car is worth more than your debts or if all your regular payments are up to date and you could afford to keep paying them, bankruptcy is not the best option for you.

If you live in Scotland, bankruptcy works differently. Read our page on bankruptcy in Scotland for more information.

How does the process of bankruptcy work? 

If you go bankrupt, all your debts will be written off allowing you to make a fresh start. However, declaring bankruptcy is a big step which involves fees and could impact many areas of your life whether it’s your job or your home.

In the UK, personal bankruptcy normally lasts for one year. During that year, you can’t borrow more than £500 without making the creditor aware that you are bankrupt. You must declare any changes in your circumstances to the official receiver. You could be asked to sell valuable assets you own such as your home or car, but you will be able to keep the things you will need for day-to-day living.You can declare bankrupt by completing the bankruptcy form, which is available on the UK’s government official site. While considering for bankruptcy, you must provide concise, consolidated and truthful information of your finances including income, assets owned, debts to be paid and other financial information as per requirement of the government. In the context of the payment of the fee, you can pay it online in either instalments or the full amount. In addition, you can pay it through cash at any Royal Bank of Scotland Branch.
For more information on declaring bankruptcy, you can seek advice from the insolvency service inquiry line. We at Free Debt Helpline provide information regarding details of bankruptcy and its processes.

1.1 Considering key points: 

Before opting for bankruptcy, ensure that you are informed of the entire process as well as its consequences. In terms of the declaration, make sure you obtain advice from your insolvency practitioner who will guide you through the process.
In addition, ensure that you have some amount of financial as savings to help you through the process. As the result of bankruptcy, the creditors will consume your entire assets and belongings. Having enough cash for your day-to-day expenses will help you with your further proceedings.
After the Official Receiver accepts your application, a meeting will be organized for the discussion of the terms and conditions applicable in the process. The documents including the information of your financial assets will be sent to your creditors.
Your financial accounts will be frozen, and your assets will be consumed to pay off your debts. Your name along with the bankruptcy details will be published on the Insolvency Register.
For the creditor to claim a petition for your bankruptcy, the number of creditors can range from single creditor to multiple creditors. This involves the their claimed amount equal to that of the requisite sum in order to claim the petition against you.
In normal periods, the bankruptcy will end in nearly a year. The Official Receiver will inform you or your organization about the ending of the bankruptcy. This is caused when most of the debts are paid or written off using your consumed viable assets.
However, debts including court fines, student loans etc. are never written off and will need to be paid off even after the expiration of the bankruptcy span.

In some cases, the bankruptcy restrictions can be maintained for 15 years, even if you or your organization is not bankrupt. This condition is applicable in the case where you or your firm resist in collaborating with the Official Receiver during the bankruptcy process.
In addition, taking on debts that you know you will not be able to repay, will also result in greater bankruptcy spans as well

How much are bankruptcy fees? 

Bankruptcy fees vary throughout the UK. In England and Wales, you pay a fee of £130 to the adjudicator and £550 to the official receiver, in a total of £680. For enquire any more details of varying UK charges see bankruptcy fees.
To Qualify for Bankruptcy, you must have a minimum Debt level £750.00.