Bankruptcy
With bankruptcy, you could have:
- Unaffordable unsecured debts written off
- No more action from lenders
- Room for your other living costs
An end to your worries about debt
Bankruptcy writes off the unsecured debts you can't afford. It's over more quickly than some debt solutions too - you'll normally be discharged after one year.
Protection against lender demands
Once your bankruptcy has been agreed, your lenders can't take any further action against you.
Makes sure you can afford your other living costs
During bankruptcy, your bills and other costs will be treated as priority. Any payments you make towards your debts will fit around your living costs, to make sure they're covered.
How bankruptcy works
To apply for bankruptcy, you'll have to fill in two forms: a Debtor's Bankruptcy Petition and a Statement of Affairs. You'll then have to attend a County Court (or Sheriff Court in Scotland), where your case will be assessed.
Although you can do this alone, a lot of people find this daunting or confusing. If you're unsure about anything, call us on 0800 161 3516 - we'll be happy to help.
If your bankruptcy is agreed, interest and charges on your unsecured debts will be frozen, and you will hand over all rights to your personal belongings (assets) to a 'Trustee'. It's the Trustee's job to oversee the sale of your assets and ensure that a fair amount of the money raised goes to each of your lenders.
Your bankruptcy will come to an end when you are 'discharged' - normally after one year. At this point, your unaffordable unsecured debts will be written off.
If you can afford to do so, you may have to make regular payments to your lenders for up to three years after your bankruptcy has been awarded.
Is it right for me?
There is a common view that bankruptcy is a 'last resort' for dealing with debts. However, there are some cases in which it can be the best option.
Bankruptcy has a few advantages over other debt solutions. For example, it's normally over within a year, as opposed to five on a typical IVA. And if you can't afford to make regular monthly payments towards your debts, you won't have to.
But you will only qualify for bankruptcy if you really can't afford to repay your debts in full within a reasonable period of time.
Final points
Bankruptcy could offer a way out of problems with unmanageable debt, but be aware that your credit rating will be affected for six years. If you're a homeowner, your home will normally be sold to help cover what you owe. If you're not a homeowner, this won't be an issue.
- 0800 161 3516
- 0161 605 4824