Bankruptcy

Bankruptcy is an alternative to an IVA where serious debts exist. Many myths about bankruptcy abound. These myths cause fear and trepidation for many people. In reality many people (depending upon their circumstances) are able to retain their homes and can keep modestly valued vehicles that they require.

In particular bankruptcy may be useful for people with unmanageable debt but who are not in a position to contribute towards those debts, perhaps using an IVA, on a monthly basis.

Bankruptcy may also be considered to be a preferable option compared to an IVA for some people that can afford to make monthly payments towards their debts. This will especially apply to those with few assets that would be put at risk by becoming bankrupt. The reason for this is that payments towards the debts will usually run for three years in bankruptcy as opposed to the standard five years used for an IVA.

To go ahead with declaring bankruptcy an individual must firstly locate their local Court that handles such work. This can be accomplished by visiting the Court Service website which has a “locater” function. It is worth calling the Court to double check that they cover your area. The Bankruptcy Clerk at the Court will be able to confirm when appointments are available.

Forms must also be completed. The Court may be prepared to post copies to you or they can be downloaded from the Insolvency Service website. These forms will need to be fully and accurately completed and then taken to the Court appointment.

At the Court appointment a fee will be payable. At the time of writing the sum is £600. Without this fee being paid the process will not go ahead. Some people on very limited incomes, who are in receipt of certain benefits, may be granted a lower total fee but this will need to be arranged in advance.

The actual Court procedure varies from Court to Court. It is likely that the Clerk will review the paperwork and collect the fee. Assuming everything is in order they may then take the paperwork into the Judge while you remain in the waiting room. If the Judge is satisfied that you are technically insolvent they may grant the bankruptcy without you entering the Court. Some Judges prefer that the individual does enter the Court at this stage. This is generally because they wish to confirm with you that you have made an appropriate decision.

Once your bankruptcy has been declared by the Court you will be put in touch with the Official Receiver. The Official Receiver is a civil servant who will become responsible for ensuring that you contribute towards your debts if you are in a position to be able to afford to do so. You may be asked to remain in Court to speak with them briefly by telephone. This conversation is likely to result in the arrangement of a more in-depth telephone conversation to review your circumstances later. In more complicated cases and where assets are involved you may be asked to later attend the offices of the Official Receiver.

Plenty of companies advertise that they can assist you with the bankruptcy process for a fee. Our experience is that the majority of people have no need for such a service and are perfectly capable of handling it themselves. However in very complicated cases, perhaps connected to business failure, reputable representation may be useful.

Bankruptcy is a very serious process and one that should only be started after good advice and careful thought. It may have a very significant impact on people in certain professions, people with restrictions in their contracts, and those that have equity in their homes. For many people though bankruptcy may be the quickest and most certain way to put their debt problems behind them.

Anyone considering bankruptcy that has debts below £15000 should also read our page on Debt Relief Orders.

Quick Reply Form

Provide us with your contact details. A qualified debt adviser will contact you ASAP.

Data never passed to other organisations.

Alternatively you may wish to call us on our IVA advice line 0800 043 7206 or 02920 435 423.

Your Name:   Your Email:   Phone Number:   Best Time To Call: Anytime Morning Afternoon Evening   Any Message:     Reload Image    Enter Above Code Here:

IVA Firms