Bankruptcy

Bankruptcy is only available for people who live in England, Wales and Northern Ireland. The Scottish equivalent is sequestration.

You can petition for your own bankruptcy or if one of your unsecured creditors is owed at least £750 they can petition for your bankruptcy. In April 2009 the Debt Relief Order (DRO) was made available as a new route into bankruptcy. The DRO is an easier and cheaper route to become bankrupt but only people who meet the qualifying criteria can enter the solution.

Benefits of bankruptcy

1. You will no longer have to deal with your creditors
2. Once your bankruptcy is completed you will be able to start again financially without any debt
3. You no longer have to make payments towards your creditors. If you have available disposable income you will have to contribute this under an Income Payment Order for 3 years.

Negatives of bankruptcy

1. Your credit rating is likely to be severely affected
2. You cannot credit of £500 or more without disclosing you are bankrupt
3. You cannot be a director of a limited company
4. You may lose your home and car

Criteria to enter bankruptcy

- Your unsecured debt must be above £750 to enter bankruptcy

- You will need to complete forms provided by The Insolvency Service