Bankruptcy

Bankruptcy Solutions

This information refers to Bankruptcy in England, Wales and Northern Ireland. Bankruptcy is a form of insolvency and is normally only suitable if you can’t pay back your debts in a reasonable time.

As bankruptcy isn’t permanent, it might clear your debts and allow you to start again.

If you go bankrupt, you will no longer have to deal with unsecured creditors and individuals to whom you owe money. Instead, a third party known as the official receiver will take control of your assets and property and administer appropriate payments on your behalf.

This may result in excess income used to pay creditors and non-essential assets such as property, vehicles, antiques, jewellery, savings etc being sold to pay off your debts.

You are normally discharged from bankruptcy after 12 months and your outstanding debts are written off. Under certain circumstances you might be able to annul your bankruptcy before you’re discharged.

How do you apply for bankruptcy?

The first thing to do is pull together all your financial personal financial details. Including payslips, credit card statements, details about personal loans, and any other creditor information. Along with this, income information will be required including payslips, benefit statements and accounts if you are a sole trader.

It’s also important that you have an understand your personal outgoings, including household expenditure and all debts.

Once you have all this information you can start the bankruptcy application process and see if it’s right for you.

It’s is probably worth taking advice from experts such as ourselves or contacting Citizens Advice Bureau or other similar organisation, as we are well positioned to provide information on how to apply and explain the pros and cons of going bankrupt.

How much does bankruptcy cost?

The fees and administration costs to go bankrupt differ depending on where you live in the UK.

You’ll need to submit your bankruptcy forms along with some fees.

Bankruptcy costs and fees in England and Wales:

• Application fee is £130
• Bankruptcy deposit is £550

Bankruptcy costs and fees in Northern Ireland:

• Court fee is £144
• Bankruptcy deposit is £525
• Solicitor’s fee of £7

In Northern Ireland if you receive certain benefits and are on a low income, the court fee may be waived. Under all circumstances the bankruptcy deposit must always has to be paid.

Can a creditor make me bankrupt?

In England, Wales or Northern Ireland if you owe them more than £5,000 a creditor can make you bankrupt.

Although it is rare, two creditors can club together if the amount you owe is under £5,000. Therefore if you owe one creditor £2,000 and another £3,000 the two creditors could apply for your bankruptcy together as the total debt passes the £5,000 threshold.

There are three ways that a creditor can petition for your bankruptcy in England, Wales or Northern Ireland and it varies dependent on which country you live in…

1. You are sent a statutory demand letter that gives you 21 days to pay your debt or reach agreement with your creditors to repay the debt. If you don’t pay the debt or reach an agreement to repay the debt your creditors can apply or petition for your bankruptcy. This is the most common way that creditors will apply for your bankruptcy.
2. If you have an Individual Voluntary Arrangement (IVA) that has failed due to you not making the agreed payments. The insolvency practitioner dealing with you IVA can petition for your bankruptcy if your creditors agree.
3. If enforcement agents have visited your home following the failure to settle a County Court Judgment (CCJ). Bankruptcy can also be considered if it is found that that you don’t have goods of a value that can be sold to pay off debt.

Bankruptcy Alternatives

Bankruptcy is very serious, and it is also worth considering the alternatives. Including Informal Agreements with your creditors. A Debt Relief Order especially if you don’t owe more than £20,000 and meet certain other income and asset criteria. An Individual Voluntary Arrangement (IVA). Or a Debt Management Plan.