Bankruptcy is a form of insolvency that can help you to clear debts that you could not otherwise clear is a reasonable period of time.
After you have been declared bankrupt, creditors will write off your unsecured debts. This allows you to have a fresh start but there will be restrictions that you are subject to for 12 months after being made bankrupt.
Is Bankruptcy right for me?
Becoming bankrupt can have some serious implications and should not be taken lightly. Bankruptcy is usually considered a last option after other solutions such as Debt Management and IVAs have been considered and found not to be viable.
During the bankruptcy process, assets you own such as your house and car will normally be sold to pay off your debts. This means that if your assets are worth more than the value of your debts, bankruptcy may not be a suitable solution for you.
Bankruptcy lasts for 12 months after which you will be ‘discharged’. During this period, you will be subject to restrictions. This means you can’t:
- Borrow more than £500 without telling the lender you’re bankrupt.
- Work as an Insolvency Practitioner.
- Act as a company director without obtaining court permission.
- Create, manage or promote a company without court permission.
- Manage a business under a different name without informing people that you’re bankrupt.
It is a criminal offence to break any of these restrictions and doing so could result in prosecution.
How do I apply for Bankruptcy?
You can apply for bankruptcy through your local County Court. Due to the complex nature of bankruptcy and variations in the ways different courts work, it is recommended that you speak to a professional debt advisor who can advise if bankruptcy is the right solution for you.
What does the service cost?
If you live in England or Wales, the fees to be made bankrupt total £705. This consists of:
- £180 Court Fee
- £525 Bankruptcy Deposit
If you live in Northern Ireland, the total fees are £647 consisting of:
- £115 Court Fee
- £525 Bankruptcy Deposit
- £7 Solicitor’s Fees
If you are on a low income or you are in receipt of benefits, you may be exempt from the court fees.
All debt solutions should be very carefully considered. Fees will be charged if a solution is taken in order for us to set up your plan and maintain it – all fees will be outlined during your consultation. Retained payment may place you further into arrears. You have the right to a cooling off period of 14 days. It is likely that your ability to obtain further credit in the short term will be affected and this may also be the case over the medium to long term.
For further information on debt solutions and their effects, AIB has produced a debtor’s guide available here.
There is free debt help and advice available through a variety of debt charities. For more information, we recommend you visit https://www.moneyadviceservice.org.uk/en/tools/debt-advice-locator
Contact Debt Advisory ServiceFor more information and Bankruptcy advice, please contact us for debt help today on 0808 301 9527 or simply fill out our Debt Advice Enquiry Form.