Help and advice for people with debt problems and requiring bankruptcy help.
Saving to go Bankrupt
When we provide bankruptcy debt advice to people it's because their financial situation means they are unable to contribute towards their debt each month. Also, the amount of equity in an asset is not substantial enough to repay the debt. One of the most vulnerable people to enter bankruptcy is the unemployed.
It could happen to anyone. One minute you've got manageable levels of credit and the next your unemployed and receiving housing benefit, council tax benefit and job seekers allowance. The drop in income is usually large enough to mean a financial problem exists - how do you pay your rent, food, electricity, gas etc as well as continue to meet your credit arrangements.
Token Payments instead of Bankruptcy
It's our responsibility to inform people of all the options available to them. One of the most popular debt solutions for people who have been made redundant and have unsecured debt is to make token payments towards the debt. This means an affordable sum of money is paid towards the debt each month, however it will not be enough to meet the contractual payment. This way your creditors know you're serious about repaying your debt but are not financially capable of doing so. Most creditors will accept a token payment each month and may even freeze interest and charges until you are back in employment.
Saving to go Bankrupt
Bankruptcy is often considered an easy route to clear off unsecured debt. However this is not strictly true and it's important people entering bankruptcy are aware of the costs and implications of this debt solution.
Firstly the costs. Bankruptcy can cost up to £700 if your unsecured debt is above £15,000. This fee can be reduced to £525 if you are on a low income or in receipt of benefits. If your unsecured debt is below £15,000 then a Debt Relief Order (DRO) could be the most appropriate solution. Either way, we often hear people tell us they can't afford to go bankrupt because it costs too much.
You can potentially get a grant from your energy provider to help with the costs of Bankruptcy. British Gas Energy Trust and the EDF Energy Trust are just two of the energy providers helping with the costs of Bankruptcy.
If you are in employment you may have to save to go bankrupt. However, this may not be the only cost you face. While Bankruptcy lasts for 1 year, an income payment order will last for 3 years and will require you to pay your disposable income towards the Official Receiver in Bankruptcy. The Official Receiver will determine how much you can afford to pay towards your Bankruptcy each month.
Finally, your credit file will be damaged as a result of entering a Bankruptcy solution. A default is added to your credit file which lasts for 6 years and will make obtaining credit more difficult in the future.
Bankruptcy debt help
If you would like Bankruptcy debt help please telephone 0800 085 0226 or complete a debt analyser and we can provide you with tailored advice.