Bankruptcy is an extremely difficult decision and should be your last resort. But for some, it can provide a way of dealing with debt that cannot be paid.
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If you decide on the bankruptcy route you must provide any information required to the official receiver and trustee, and attend their office as and when requested.
Disadvantages of bankruptcy
- Any asset apart from those needed for a basic standard of living will be sold. This will likely include your home (if owned by you)
- You are not permitted to take out more than £500 worth of credit without disclosing that you are bankrupt first
- Any income you receive in excess of those required for basic living needs will have to be paid to your creditors
- There are certain trades and professions that will not allow you to work when bankrupt
- Your credit rating will be adversely affected for some time after your bankruptcy ends.
- Your bank may also close, or place restrictions, on your banking and credit accounts
- Your bankruptcy will appear in public on the Insolvency Register
- Your ability to obtain credit will be severely affected and your bankruptcy will appear on your credit file for a minimum of six years
Advantages of bankruptcy
- Once your bankruptcy period reaches its end, all outstanding debts are written off (apart from debts obtained by fraud, monies owed for damages, fines or under matrimonial and family proceedings)
- You could be debt free in one year, depending on your circumstances
- If you are living in rental accommodation and do not have any arrears, you can carry on paying the rent as normal. In this situation, you have little to lose and all you outstanding debt will be written off when the bankruptcy period ends.
Important things to know
- If you live in England, Wales or Northern Ireland you are able to declare yourself bankrupt.
In England and Wales:
- The bankruptcy deposit is £550 and
- The adjudicator fee is £130
In Northern Ireland:
- the court fee is £115
- the bankruptcy deposit is £525, and
- a solicitor’s fee, which is normally £7