Bankruptcy Guide

Find out more about bankruptcy in our guide

We will tell you:

  • What bankruptcy actually is
  • How you could enter bankruptcy
  • Some of the disadvantages of bankruptcy

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Bankruptcy advice guide

Here at Debt Advice Now, we understand how difficult it can be if you have unsecured debts you've lost control of and can no longer afford to repay.

If you've got a significant amount of unsecured debt - say, on credit cards, personal loans, overdrafts, catalogues, etc. - and there's no way you can repay your lenders in the foreseeable future, bankruptcy is one way of dealing with the problem, and could be the most suitable solution for you.

However, entering bankruptcy is a serious decision to make, and really requires some thought and consideration before deciding whether it's right for you.

We are committed to helping struggling borrowers find the best way of dealing with their debt problems at a pace that's right for them. Keep reading our bankruptcy advice guide for more information.

What is bankruptcy?

Bankruptcy is a legal process available throughout the UK (though in Scotland it's sometimes referred to as 'sequestration'). It's designed to provide a way out of serious debt problems for people with a large amount of unsecured debt they simply cannot afford to repay in a reasonable amount of time.

How does bankruptcy work?

Bankruptcy is a legally binding solution and is a formal court procedure. Once you enter bankruptcy, your assets and income are dealt with by a licensed practitioner or an official receiver. You'll have to repay your lenders whatever you can realistically afford (taking into account your basic living costs, such as rent/mortgage, food & bills), for a period of up to three years.

What's more, entering bankruptcy will also:

  • Stop any further legal action from your lenders
  • Write off any remaining unsecured debt (with certain exceptions, such as student loans, fines etc.) you can't afford to repay once you've been discharged - in most cases, after a year
  • Allow you to make a fresh start after only 1 year

Call us today on 0800 970 7673 for more information.

How could I enter bankruptcy?

If you decide that bankruptcy is the best way for you to get on top of your unmanageable debts, you may decide to petition for your own bankruptcy. To do this, you'll have to make a request for bankruptcy to the court, setting out why you need to enter bankruptcy, and fill in a form showing all your assets (that is, anything you own that could go towards repaying your debts), the details of your various unsecured lenders and how much you owe each one.

You may have to pay two fees to make yourself bankrupt: a £525 deposit towards administering your bankruptcy (payable in all cases), plus a £175 court fee (this can be waived in some cases, e.g. if you're receiving Income Support)1.

On the other hand, your unsecured lenders may decide to make you bankrupt, if they've looked at all the other options and consider it the best way of getting back a reasonable amount of what you owe them.

Debt Advice Now can offer more bankruptcy advice. If you want to know anything about bankruptcy, or any other debt solution, all you have to do is call on 0800 970 7673.

What are the downsides of bankruptcy?

Bankruptcy will have a major effect on your finances. Once you've entered bankruptcy, you:

  • May have to sell any valuable possessions you own to help repay your debts - if you're a homeowner, this includes your home
  • Won't be able to work in certain professions, e.g. as a company director/local government councillor
  • Will see your credit rating damaged for six years, which is likely to make getting further credit difficult during this time.

Is bankruptcy right for me?

Bankruptcy will have a serious impact on your finances - but it may still be the most appropriate solution for you.

If you need a new approach to serious debt problems, bankruptcy could definitely be an option worth thinking about - and getting professional bankruptcy advice should be your first step.