Not everyone is in the position to pay off their debt. If that’s the case, Bankruptcy could possibly be the best solution for you.

If you are in a position where you are unable to pay back the money that you owe, there are a variety of routes you can go down which will help you with your repayments. After assessing your current financial situation and the state of your debt, it may be that you qualify for Bankruptcy. There are certain areas that need assessing to ensure that you are eligible for Bankruptcy, and our experienced team at MoneyAdvice will decipher your suitability in a matter of simple steps.

What is Bankruptcy?

Quite simply, Bankruptcy is when your debt and any other additional charges are legally written off, meaning you do not pay anything to your lender within the 12 months the bankruptcy is valid. After your appeal is signed off by yourself and your original lenders, they cannot contact you within those 12 months or ask you to pay for any of the money you owe.

If it comes to the end of the 12 months and your financial situation has not substantially improved, all of the money that you owe including that of the Bankruptcy will be made null.

How does Bankruptcy Work?

If your financial situation means you have no means to repay your debt within a credible time frame, and there are no other forms of debt solution that suit you, then Bankruptcy is what might be best.  By declaring Bankruptcy through signed agreements from yourself, your lenders and us, all of the debt that you cannot afford at this time is written off and is done so within a legal contract. Under the terms and conditions of Bankruptcy, the only payments you will be liable to are any unsecured debts that you owe, but then that’s if you have the means to do so.

As previously mentioned, Bankruptcy is valid for 12 months from the date that it is officialised.

 

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What are the steps?

We understand that this may be a very stressful time for you and everyone involved. We can assess your situation and inform you of your options in just one call. Here’s what you can expect if you meet the requirements to declare bankruptcy.

1. Speaking with our MoneyAdvice Experts

Using details of your current financial situation as well as the debt that you owe, our team will assess whether you are eligible for Bankruptcy. As this is a last resort, they will first see if there is another Debt Solution that suits you, but if you don’t fit any of the criteria, you will go to the next step in the Bankruptcy process.

2. Filling out an Online Application

Once our experts have concluded that Bankruptcy is the right solution to you, you will then be directed to an online application form or a ‘Petition’ in which you will fill in to appeal for Bankruptcy. We will be with you every step of the way, making sure you understand every aspect of the process. This Petition will then be sent over to the Insolvency Service for review.

3. The Insolvency Service Considers your Application

If your application is accepted by the Insolvency Service, then the order will be made and your original lender will be notified that you have declared Bankruptcy. This is when your repayments will stop, and your lender is not able to contact you until the bankruptcy has ceased.

4. 12 Month Review

When your Bankruptcy is coming to an end, your financial situation will be reviewed and if it has not improved and you are still not in a position to pay your debt within a reasonable time then the money that you owe, including the Bankruptcy will be eliminated.

Bankruptcy is available subject to eligibility and acceptance

Am I eligible for Bankruptcy?

As Bankruptcy is a last resort option for those struggling to pay their debt, it would be good to consider some aspects of your financial situation before coming to us for an official assessment. You should contact MoneyAdvice in regards to declaring bankruptcy if the following sounds familiar:

The total amount of money owed equates to the value of your possessions.

There is no way in which you can pay back your debt at a reasonable amount of time.

You possess little to no income which would allow you to adopt any other debt solutions such as a Debt Management Plan or Debt Relief.

It is unlikely that your financial situation will change or better in the upcoming months.

How Will Bankruptcy Help Me?

As a Debt Solution, Bankruptcy will effectively eliminate all of your secured debt and your repayments. It provides you with a peace of mind, and a life without debt so you can work hard at improving your financial state. It is a solution for those who are truly struggling but should not be taken lightly due to the effects it will have on your future finances, hence why it is used only as a last resort.

After officially declaring Bankruptcy, it will be noted on your credit history for six years and will have to be stated on any form regarding new employment or credit. There is also a £680 Bankruptcy fee which covers costs stemming from the Insolvency Service, as well as risks to your belongs and assets, all of which will be explained to you within the process.


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Bankruptcy FAQ

This is a legal proceeding for customers unable to repay outstanding debts and are in severe financial difficulties. It is a practical way of dealing with excessive amounts of debt that the customer cannot pay. It will free the customer from the debts allowing a completely fresh start, subject to a few restrictions and also ensure assets are shared fairly amongst creditors.

Anybody could be made bankrupt.

Bankruptcy would be an appropriate option if you can’t keep up payments to your creditors or make the payments in a reasonable time. 

We would advise you not to pursue bankruptcy if you are managing with your payments. Bankruptcy would mean that your assets (house / car) would be sold to pay your creditors and so if your assets are worth a greater amount than your debts, bankruptcy would not be

 

No, only your most expensive assets will be taken to be sold. For example, if you have an expensive, you would be advised to downgrade. You also keep your essential items for everyday living.

Your assets are taken in order to be sold. This money pays for the bankruptcy proceedings and then the rest of the money goes towards your creditors to pay off money from your debts.

Bankruptcy fees total £705. This consists of a £180 court fee and £525 to the official receiver who carries out the procedure. 

The fees may be vary depending on your income. If it is low or if you are on benefits then you could be exempt from the court fee, meaning you just have to pay £525. 

 

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