At the charity we're receiving an increasing number of calls from people who have been made bankrupt by a creditor, despite not being insolvent. Being insolvent means that you can't afford to pay your debts as they fall due, and you don't have assets which outweigh the debt. For example, a house with £30,000 equity and unsecured debt of £10,000.
The helpline at Debt Support Trust is supporting an ever increasing number of people who have been made bankrupt but have equity in their assets.
One such case was a couple who hadn't paid their council tax and the local authority took action and made the couple bankrupt. Their property had £80,000 equity in it and the official receiver began proceedings to sell their house. The unsecured debt for council tax was £7,000.
What Can You Do To Avoid Bankruptcy?
If you want to avoid bankruptcy then there are some tips and advice we can provide, these include:
1. Deal with the debt: When debts begin to increase it can feel like they are uncontrollable, but by dealing with the debts you will be taking positive action to rectify the problem.
2. Get a solution: Entering some debt solutions will protect you from bankruptcy and losing your property.
3. Negotiate with creditors: If you speak to the companies you owe money to then they you can organise a payment plan and avoid bankruptcy.
4. Seek help: Our debt charity can help you with advice and support you through dealing with your debt.
You can call for advice on 0800 085 0226 or complete the debt analyser enquiry form today.
Can't I enter an IVA when I'm Bankrupt?
The IVA debt solution is suitable for people who have assets and want to protect them from their creditors. However, once bankruptcy has been awarded against you, then it's impossible to enter an IVA.
The IVA would protect your house and assets but you would need to proceed with this debt solution before bankruptcy has begun.
What Can I Do Once Bankrupt?
If you have been made bankrupt and the official receiver or bankruptcy specialist wants to sell your property to give money back to your creditors then there are only a few options available to you.
Your property is considered as an asset. If there is equity in the property then they can use this equity to repay your debts.
The official receiver does not have to sell your property but they do have to get the equity. This is the same for any asset, whether it's a house, car, shares or any other asset.
If you are able to release the money, typically via a third party (family or friend) offering the money, then the official receiver would allow you to do this and this would help you keep your asset.