Bankruptcy raises a lot of questions because it’s the most extreme debt solution anyone can enter and the consequences of it can be serious.
What is Bankruptcy?
A debt solution which allows someone who are unable to repay anything to their debt to declare themselves insolvent. In bankruptcy people may not have to repaid anything if they cannot afford to, i.e they’re on benefits. There are different routes to enter bankruptcy depending on the financial circumstance of the person in debt.
Can Anyone Enter Bankruptcy
Only people living in England, Wales and Northern Ireland can enter bankruptcy, the equivalent in Scotland is sequestration.
Does Bankruptcy Cost?
Standard bankruptcy whereby someone completes the forms at their local county court does cost £750 or £550 for those who are on benefits. If someone enters bankruptcy through the debt relief order it will cost £90. The only other option is waiting for creditors to declare them bankrupt which doesn’t cost anything.
Will Bankruptcy Write Off My Debt?
Not necessarily because the official receiver in bankruptcy who manages the solution could demand contributions are made to the debt. If someone is working they will likely implement an income payment order. If someone is working they should always consider an IVA first.
How To Enter Bankruptcy?
It’s extremely important to seek debt advice before entering bankruptcy because the consequences are serious. To enter standard bankruptcy someone just has to complete the appropriate forms at their local county court. To enter bankruptcy through a debt relief order a qualified DRO adviser is needed to complete the forms. The debt advice organisation should be able to find a DRO adviser for anyone applicable for the solution.
Does Bankruptcy Affect My Partner?
Debt is personal so it doesn’t directly affect others how it can have an impact. If two people have joint debts and/or assets the debts will become the responsibility of one person and half the asset could be realised.
Will I Lose My House?
If there is enough equity in the property the official receiver will likely demand the house is sold and any proceeds paid to the debt.