If you live in England, Wales or Northern Ireland and you are struggling to repay debts, you can choose to apply for bankruptcy (if you live in Scotland there are alternative solutions). This is usually a last resort as it will involve selling your assets to repay your debts. You should always check if there are other ways to deal with your debts before you apply for bankruptcy. In the UK, the term ‘bankruptcy’ only applies to individuals; the equivalent terms for insolvency in businesses is ‘administration’ or ‘liquidation’.
Bankruptcy is recommended for whose liabilities (debts) are greater than their assets. It usually lasts for a year, and after this time, most of your remaining debts will be written off. If you earn enough to have a surplus income of more than £20.00 you may be required to make payments into the bankruptcy for up to 3 years.
To apply for bankruptcy you must complete the online application process and pay a fee of £680. On this application you will need to provide details of:
- wage slips
- benefits or pension statements
- bills, eg electricity, credit card and council tax
- letters from a bailiff or enforcement agent
Your application will be looked at by an adjudicator at the Insolvency Service and they will decide if you should be made bankrupt.
If the adjudicator decides that you should be made bankrupt:
- You will receive a copy of the bankruptcy order and may be interviewed about your situation
- Any assets you have could be used to pay your debts
- Your details will be published in the Individual Insolvency Register
In addition there are a number of restrictions placed on you once you are declared bankrupt. You must follow these restrictions, and if you fail to do so it will be seen as a criminal offence, and you could be fined:
- You can not borrow more than £500 without telling the lender that you are bankrupt
- You are prohibited from acting as a director of a company without permission from the court
- You are not allowed to create, manage or promote a company without the court’s permission
- You can’t manage a business with a different name without telling people you do business with that you are bankrupt
- You are prohibited from working as an insolvency practitioner (an authorised debt specialist)
After 12 months you will normally be released from your bankruptcy restrictions and debts, however assets that were part of your estate during the bankruptcy period can still be used to pay your debts.
If you are considering bankruptcy, there are other debt solutions available to you. Contact Creditfix to speak with one of our advisers and see what’s best for you and your situation.
Call us now for immediate and confidential free debt advice on 0808 208 5198 or complete the form. We can start to work through our debt problems as soon as you contact us.
- Once granted you will be protected from creditor action.
- You could be discharged after 12 months.
- Debts written off at the end of the agreement.
- You may be required to sell your assets, including your property.
- If you afford to do, you may be required to make a monthly contribution for 3 years.