Bankruptcy is a way of managing debts you can’t pay. To be declared bankrupt you must make an application to the Insolvency Service and pay a fee of £680. Once the bankruptcy order has been made, your assets will be sold to pay off your debts. For the first year of Bankruptcy you’re ‘undischarged’ and will have certain restrictions placed on you (i.e. applying for credit). After this time most outstanding debts are written off, allowing you to make a fresh start.
Pros and Cons of Bankruptcy
Benefits
- Once you have completed the bankruptcy you will be completely free from any unsecured debts that were included in the bankruptcy proceedings.
- Bankruptcy provides automatic discharge after one year – less in some cases – and with that comes relative peace of mind.
Things to consider
- Your assets, including your home and car, can be included and sold to raise money to repay creditors.
- You won’t be able to act as a director of a company
- You will need court permission to take any part in the management of a limited company
- It may be difficult to obtain credit in future, as a record of the bankruptcy order will stay on your credit history for up to six years
Fees
Bankruptcy fees vary throughout the UK. In England and Wales bankruptcy fees total £705. You pay a £180 fee to the court and £525 to the official receiver. If you have a low income or receive benefits you may be exempt from the court fee, allowing you to go bankrupt for £525.
For more information on bankruptcy in England and Wales, click HERE
For more information on bankruptcy in Scotland, click HERE
For more information on bankruptcy in Nothern Ireland, click HERE