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Free Bankruptcy Advice
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Bankruptcy is a debt solution for people who are unable to pay their unsecured debt each month. You can apply to make yourself bankrupt or a creditor (company you owe money to) could make you bankrupt. To be applicable you must live in England, Northern Ireland or Wales – in Scotland it’s known as Sequestration.
You can enter the solution by applying online via the Insolvency Service in England and Wales. In Northern Ireland you can apply via the High Court. The cost in England and Wales is £130 application fee and £550 for the deposit (£680 in total). In Northern Ireland the cost is £144 court fee, £525 for the deposit and £7 solicitors fee (£676 in total).
Before you apply it’s essential you get advice tailored to your circumstances – it’s very difficult to reverse the decision once it’s been approved. If you want to receive specific advice on your circumstances then call our friendly debt advisers on 0800 085 0226. Debt Support Trust is a registered debt advice charity helping people across the UK.
You can apply yourself or if one of your unsecured creditors is owed at least £5,000 (or a share of debt totalling £5,000) 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. If you owe less than £30,000, you don’t own your own home, have a low disposable income every month and don’t have any assets worth more than £1,000 then the DRO could be suitable for you.
The cost to enter a debt relief order is £90 which you must pay to apply.
How Do You Go Bankrupt?
Once you’ve received debt advice and help from a debt adviser then we will help you with the next steps.
You no longer need to attend court and can apply online (except in N.Ireland). You will be asked to supply information about your debts, income, expenditure and assets. If you have creditor statements or letters from bailiffs you should add these too. You then pay your application fee and your application is referred to an adjudicator.
An adjudicator will assess if you can pay your debts and whether bankruptcy is appropriate for you. After the adjudicator agrees with your application, you will no longer need to liaise with your creditors and an official receiver / insolvency practitioner will be appointed. They will be responsible for setting an income payment order (if applicable), realising any assets for the benefits of creditors and communicating with your creditors. When you’re made bankrupt your details will be listed on the Insolvency register and it can affect your employment opportunities. It’s important to check your contract of employment before entering any insolvency solution.
You will speak with your official receiver as it’s their responsibility is to assess how much money you can afford to repay towards your debts. The official receiver will consider your available disposable income each month for 3 years and potentially the sale of assets like a house, car or investments (if there’s any realisable equity). Creditors cannot request their money back when you are in the solution so you are not required to make payments to your debts, instead you should liaise with your official receiver.
Once you’re discharged, usually after 1 year, your outstanding debts will be written off. Income payment arrangements / income payment orders will last for 3 years.
Too often we speak to people where they have entered a debt solution without seeking professional debt advice. This can mean that assets, like a house or car, are sold when they originally believed they would not be considered. Also, there are guidelines on acceptable levels of expenditure and if you have a disposable income you could be asked to pay this to the official receiver.
It’s for this reason we strongly recommend sourcing money advice before proceeding. You can receive help from our charity helpline on 0800 085 0226.
What Is Not Included In Bankruptcy?
There are some debts which are not included, for instance, if you owe money to your student loan this cannot be included within your bankruptcy. Similarly, if you have any secured debts, these are not included and you should maintain payments to these debts. This is typically the case if you have a mortgage on your property with a secured loan too. If you are unable to maintain payments to your secured loan then you would risk your property being repossessed. Any debt which has been accrued via illegal or fraudulent means can also not be included. Child maintenance and TV licence arrears can also not be included.
You must continue to make payments to necessary expenditure such as gas, electricity and council tax once you are in any debt solution. Failure to make these payments could mean you obtain new debt which won’t be included.
- You will no longer have to negotiate or communicate with your creditors.
- Once your bankruptcy is completed you will be able to regain control of you finances and move forward without any debt.
- 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.
- Creditors won’t be able to take any further action against you.
- Your credit rating is likely to be severely affected.
- You cannot acquire credit of £500 or more without disclosing you are bankrupt.
- You cannot be a director of a limited company.
- You may lose your home (if it has equity), car or any other assets over £1,000.
- Some employers will not allow you to enter bankruptcy and in doing so you could lose your job. You should check your contract of employment first.
- If you receive income for employment, a private pension or any other form of income which is not state benefits then you may be asked to make payments to your bankruptcy for 3 years.
Get In Touch For Money Advice
Andrew & Liz
Andrew was a 42 year old living with his partner and 3 children in rented accommodation. Recently Andrew’s business ceased trading; it was a limited company, however he had a personal guarantee for 1 loan and the creditors were now actively seeking repayment. To help keep the business trading he used credit cards to pay for business costs until the pressure became too much and he decided to close the company.
He was solely living on benefits and whilst he was looking for employment, his level of debt was too large to repay the money he owed. Andrew had thought about the IVA option however didn’t think he would be able to afford the monthly contribution when he found work. We assisted Andrew with the process and explained about the online application. Andrew’s supportive debt adviser explained the costs to enter bankruptcy and the next steps. Andrew asked friends to help him with the application fee and he’s now protected from his creditors.
We helped Liz with her debt problem when she reached out for advice.
One of our helpful volunteers took the initial call and asked a debt adviser to provide advice. Liz was recently retired and struggling to maintain repayments to her debts. With only state pensions / benefits as income, she was finding it tough to continue to pay all of her creditors. After completing a statement of affairs, Liz was unable to contribute any of her disposable income each month to her creditors and felt her unsecured debt (£24,000) was too large to repay. Liz had no assets and was living in rented accommodation.
Liz explained that she felt obligated to repay the debt, but agreed that she financial would not be able to.
After paying the £680, Liz was appointed an official receiver to manage her bankruptcy and would be discharged and debt free within 1 year.