Bankruptcy is often regarded as the solution that you use if all your other attempts to resolve your debt problems have failed. However it is actually wrong to view bankruptcy as a negative solution.
Particularly if you are renting or have little or no equity in your property bankruptcy actually offers one of the best ways to solve your debt problem. This is because it can be used even if you cannot afford to pay anything towards your debts and will normally result in significant amounts being written off. It is also normally the fastest way to become debt free as it lasts for far less time than most other debt management solutions.
What is bankruptcy?
Bankruptcy is one of the most misunderstood debt solutions in the UK. Most people think bankruptcy is to be avoided however depending on your specific circumstances it could be a very sensible way of resolving your debt problems. The key facts about bankruptcy and a helpful video are available here.
Is bankruptcy suitable for me?
Whether or not bankruptcy is the right solution for you will depend on your individual circumstances and your attitude towards repaying your debt. Bankruptcy will affect different people in different ways and so it is important to consider bankruptcy in the light of your own specific situation. Some of the main implications of bankruptcy are highlighted here together with a video which will help you decide if bankruptcy is appropriate for you.
How Do I declare myself bankrupt?
To declare yourself bankrupt you will need to follow a process of completing the necessary application forms and then submitting them in person to your local Court. This can seem a daunting task however it is made much easier if you are prepared and have taken the right advice. All the information you will need about the process of going bankrupt including a step by step guide and useful video is available here. Information is also available about how to declare bankruptcy if you live in Northern Ireland, Scotland or outside of the UK.
How much will bankruptcy cost?
The cost is one of the things that may make you think twice about choosing to go bankrupt. There is a fee of £700 per person in England & Wales which has to be paid upfront at the court. However despite this fee declaring yourself bankrupt may still be the best debt solution for you as you will be debt free in the fastest time while paying the least amount back to your creditors. Information about how to pay the bankruptcy fee, possible reductions and advice on how to get the money together is available here.
Government Advice about bankruptcy
The Government’s Insolvency Service has also produced a useful guide to personal debt solutions “In Debt – Dealing with your creditors”.
Bankruptcy living expenses guide
One of the key tasks you will need to carry out to declare yourself bankrupt is to complete a living expenses budget and enter this into your application form. This information will be used to decide how much you can afford to pay to your creditors each month. If you complete this incorrectly you may be asked to pay too much. Advice and guidance is available here about how to complete your bankruptcy living expenses and a guide to all the allowable living expenses is available to download.
How will bankruptcy affect my credit rating
If you declare yourself bankrupt it is critical to understand how this will affect your credit rating. You need to understand what if any credit you will be allowed when you are bankrupt and how long your credit rating will be affected after your bankruptcy is over. All the information you will need about bankruptcy and your credit rating is explained here. There is also a detailed guide about how to improve your credit rating after you have gone bankrupt.
The advantages and disadvantages of bankruptcy
If you are trying to decide whether or not it is the right debt solution for you it will be useful to review a summary of the main advantages and disadvantages of bankruptcy. You can find these together with a useful video here.
Bankruptcy Frequently Asked Questions
Before you make the final decision to declare yourself bankrupt it is likely that you will have a lot of questions about what this debt solution will mean for you. You will be able to find answers to many of the most commonly asked questions here.
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