Bankruptcy

Bankruptcy is a legal process that can write off most of your debts if you cannot pay them. It provides a fresh start but has serious consequences including potential loss of assets and impact on your credit rating. Bankruptcy typically lasts 12 months, after which most remaining debts are written off.

Here is how bankruptcy works: 1. You apply online through the Insolvency Service (costs 680 pounds) 2. An official receiver is assigned to your case 3. They assess your assets, income and debts 4. Assets of value may be sold to pay creditors 5. You make payments from income if you can afford to 6. After 12 months, you are discharged and most debts are written off Some restrictions apply during bankruptcy and for a period after.

Bankruptcy might be suitable if:

• You owe more than you can realistically repay
• You have few valuable assets
• You are unlikely to have significant income increases
• You need a definite end date for your debts
• Other debt solutions are not appropriate

Bankruptcy is a serious step and not right for everyone. Get advice before deciding.

When you go bankrupt:

• Your home may need to be sold (or your share of it)
• Valuable items like cars, jewelry, or savings may be taken
• Your pension is usually protected
• Essential household items are not taken
• Tools needed for work up to 750 pounds are protected

If you have equity in your home, the trustee has 3 years to deal with it.

While bankrupt, you:

• Cannot borrow more than 500 pounds without telling the lender you are bankrupt
• Cannot act as a company director
• Cannot work in certain professions (check with your employer)
• Must tell the official receiver about any changes in circumstances
• Cannot open a bank account without telling them you are bankrupt

These restrictions usually end when you are discharged after 12 months.

Bankruptcy covers most debts including:

• Credit cards and loans
• Overdrafts
• Utility bill arrears
• Council tax arrears
• Tax debts

Some debts are NOT written off:

• Student loans
• Court fines
• Child maintenance arrears
• Debts from fraud
• Some benefit overpayments

Bankruptcy is a major decision. Our advisers can:

• Explain if bankruptcy is right for your situation
• Compare it with other debt solutions
• Help you understand the consequences
• Support you through the process

Contact us today for free, confidential advice.