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What is Bankruptcy?

Bankruptcy is a way of legally declaring your inability to pay your creditors. In Bankruptcy you usually stop paying your creditors. Your creditors cannot chase you for the outstanding debt.

If you feel your debts are completely unmanageable Bankruptcy could be your best option. Before going bankrupt it is important that you understand all the options available to you. Bankruptcy can have a serious impact on your future and even your job so it is important to get the right advice and information.

How to go Bankrupt

There are two ways to go Bankrupt in the UK.

1. You can petition for your own bankruptcy which is known as a 'debtors petition'.

2. A creditor who you owe more than £5,000 to, can petition for your bankruptcy. This is known as a 'creditors petition'.

Bankruptcy is an option that often has to be considered when an individual cannot pay their debts as they fall due.

When your debts seem totally out of control, so much so that you will never pay them off, bankruptcy can take away all the stress of making debt payments.

Although bankruptcy has a perceived stigma and is publicly advertised, it should always be considered when dealing with insolvency matters.

It can provide a real fresh start for debts that will never be repaid.

Bankruptcy Advantages

  • Bankruptcy could write off all your debt (exceptions listed below) and leave you debt free within 12 months.
  • Creditor harassment stops with immediate effect as you no longer have to deal with them.
  • If you are living in rented accommodation you will be allowed to stay there (providing you maintain payments).
  • If you require your car to travel to and from place of work then this will be deemed acceptable (usually up to the value of approx £1,000).
  • It allows you to make a fresh start.

Bankruptcy Disadvantages

  • Assets may be sold in order to address any equitable value (where applicable).
  • Some debts cannot be written off such as student loans, court fines, overpayment of benefits and child support.
  • You are not allowed to obtain credit in excess of £650 without first disclosing your bankruptcy.
  • You cannot hold position of company director.
  • You cannot trade in any business under any other name.
  • Bankruptcy can have implications on certain professions:
    You may not practice as a Chartered Accountant / Lawyer
    You may not become a Member of Parliament
    You may not act as a Justice of the Peace
    You may not become a member of the local authority
  • A record of the bankruptcy will remain on your credit file for six years. It will also be recorded on the Insolvency register.
  • Any surplus income in excess of £20 is likely to be requested in an Income Payments Order which would have to be paid to the Official Receiver each month for 3 years.

» Bankruptcy Articles

The Stigma of Bankruptcy

Bankruptcy is often referred to as the option of last resort for people. When you are in financial trouble you are desperate to find a way out. Many people try to avoid being declared bankrupt and some opt for another solution even though bankruptcy may well be the best solution for them. It’s hard to […]

Need Bankruptcy Advice

If your debt situation has become unmanageable to the point where bankruptcy may be possible, it’s imperative that you get solid advice. Even if you cannot meet your debt payments anymore, this does not necessarily mean that you will definitely have to go bankrupt, as there are other possible consequences that are much less serious. […]

Insolvency and Bankruptcy explained

Insolvency and Bankruptcy are essentially both terms describing the position of a person or company that is no longer able to pay their debts. Insolvency is normally used when referring to businesses, and bankruptcy vavrto individuals, however there are many times when the terms are used varyingly in both contexts. What is Insolvency? Insolvency is […]

Need IVA Advice

If you’re in serious financial difficulty it’s impossible to overstate the importance of getting good advice. This is particularly the case if your situation is moving towards insolvency or bankruptcy. Apart from the fact that handling these issues requires the skills of professionals who specialise in them, it’s also the case that an expert can […]

I don’t want to go Bankrupt

If you’ve found yourself simply unable to meet your outgoings and are facing bankruptcy, there may be more options than you think. You should seek the advice of a professional such as an Insolvency Practitioner to work out the best way to move forward. An Insolvency Practitioner will take into account such factors as your […]

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Money Advice Service

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Client Review

Can't thank you enough

Star rating : 5/5

Before things got out of hand I decided after reading other reviews to contact National Debt Relief for advice. An extremely helpful team discussed my options and explained how things would work. I was starting to get numerous calls and letters from creditors looking for full repayments on my loans but given the nature of the pay cut I received this was no longer possible.

After I contacted National Debt Relief and agreed a payment plan to repay my loans in a restructured way my life changed. No more calls, texts or letters from creditors demanding money. And that was all down to the negotiation skills of the team of fantastic staff at NDR. I'm forever grateful .. So if ur in the same situation, I would advise that you pick up the phone and take the first steps.

Written on 18/04/2013,
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