If your debts are spiralling out of control and you see no other way forward you might think going bankrupt is your only option. As well as applying for bankruptcy yourself, a creditor (someone you owe money to) that is owed at least £5,000.00 can also apply for a Bankruptcy Order to make you bankrupt.
BANKRUPTCY IS NOT THE ONLY OPTION – TAKE ADVICE BEFORE YOU PROCEED
Bankruptcy usually lasts for one year, however, the Official Receiver will tell you when yours is over. Most of your debts will be written off, but some debts like court fines and student loans can never be written off.
Before you apply to go bankrupt, you need to be aware that your bank accounts will usually be frozen so you will need to ensure you have enough cash for your day to day expenses.
If your application to go bankrupt is accepted and your bankruptcy order made, your money and financial affairs will come under the control of the Official Receiver. The Official Receiver will interview you and write a report about your financial situation and send it on to your creditors making them aware of your bankruptcy.
If you do not co-operate with the Official Receiver or you have knowingly taken on debts that you knew you could never pay back, a bankruptcy restriction order could be made against you. This will seriously affect your financial affairs and can last upto 15 years.
Advantages of going bankrupt
In many cases a bankruptcy order can be finalised in one year leaving you to make a fresh start and get on with your life.
- You are allowed to keep certain things, like household goods and a reasonable amount to live on.
- You no longer have to deal with creditors chasing you for money.
- Creditors Court action is stopped. (except for certain court fines or student loans).
- Most debts are written off.
Disadvantages of going bankrupt
If you lie or make a false statement when applying to go bankrupt it is a criminal offence and you could be fined or sent to prison. Other disadvantages include:
- There is a £680 fee to apply for Bankruptcy.
- If your income is high enough, you will need to make payments towards your debts for 3 years.
- Your credit rating is affected for 6 years and you may find it difficult to apply for any further credit.
- Some possessions may have to be sold including your home, car and any luxury items.
- Your pension could be affected.
- In some professions, if you have been made bankrupt, you can’t carry on working.
- If you are a business owner, assets may be sold and the business closed down.
- Going bankrupt can affect your immigration status.
- Bankruptcy orders are published publicly on the Bankruptcy Register.
Our Professional Advice to you
Whilst going bankrupt may seem like your only option, it’s not! Our advice would be to talk to a professional Insolvency Practitioner immediately to discuss your financial affairs. We have helped many people over the past 25 years and strongly believe that there are other ways to become debt free.
Call us today for FREE advice on 01932 336149
Frequently Asked Questions
How to get your bankruptcy order annulled – The Judge’s decision is not always final
IVA – An alternative to Bankruptcy – Compare your Options
IVA or Bankruptcy – Which is better?
Apply to Bankrupt someone who owes you money
The Insolvency Services guide to Bankruptcy