Who Can Go Bankrupt?
Who Can Go Bankrupt?
Almost anyone in debt can go bankrupt in England, Wales and Northern Ireland. In Scotland, you could go into ‘sequestration’. A creditor can only petition to make you bankrupt if you owe at least £5,000, but you can voluntarily make yourself bankrupt without any limitations. This, however, is not a decision you should take lightly, and there are many other debt solution alternatives you may want to consider before you make this decision.
Who could benefit from bankruptcy?
Bankruptcy’s greatest advantage is that it is the fastest way to deal with your debts, particularly your unsecured debts. However, the process of doing this can be very difficult and demanding and can involve the sale of many of your personal belongings. As such, it is advised that bankruptcy may only be suitable for people who:
- Have few belongings of value, such as a car, games consoles, cameras or jewellery
- Don’t own their homes, or have very little equity in their home
- See no other way of paying off their debts
- Have debts worth significantly more than they can pay off every month
- Have a total value of debt much higher than the total value of the assets you own.
- Are able to pay the £680 fee to apply for bankruptcy
Who could benefit from a different debt solution?
There are many situations that make bankruptcy particularly difficult. This might be because it could affect your job, your home, or that there is better suited method of debt relief. As such, people who may not benefit from bankruptcy may include those who:
- Have a lot of equity in their home as you can remortgage your house to repay your debts. Even if the equity in your home is still less than your debts, other formal debt solutions, such as an IVA, allow you to reduce your repayments, use your equity, but keep your property to repay your debts within a limited time frame.
- Work as solicitors, accountants, estate agents, or many other occupations. Many professional associations don’t allow those who have bankruptcies. It is important to check your contract and ask for advice if you are unsure how your career may be affected.
- Might have a change in circumstances in the near future. This could be a successful PPI claim, inheritance, pension or other windfall, or even a promotion at work, as these could all be used to pay off your debts without risking your property.
- Are worried about making their debts public. Becoming bankrupt places you on a publically available Insolvency Register, but, more importantly, as it dominates most aspects of your financial life, it can be quite difficult to hide. You must be prepared for your loved ones, and possibly others, to know about your debt problems.