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Bankruptcy is a form of insolvency that writes off the entirety of a person's debts with only a one-time administration fee paid by the debtor. Bankruptcy is usually a last resort due to the implications it can have and should be considered carefully.
What is bankruptcy?
Bankruptcy is a debt solution that writes off the entirety of your debts if you cannot afford to pay them; there's a one-time administration fee of £680 to begin the process. It's a legal process that can give you a fresh start if you have no hope of paying your debts back.
Is bankruptcy right for me?
Bankruptcy may be suitable for you if you are insolvent - meaning that you cannot pay your creditors when your bills are due or that your total debts are greater than the value of your assets. Bankruptcy can have serious implications on your personal, financial and professional life and so should be considered carefully. Bankruptcy is available for residents of England, Wales and Northern Ireland. For residents of Scotland, sequestration is a similar solution.
Is bankruptcy legally binding?
Bankruptcy is a legally binding process and once your bankruptcy has been agreed with your creditors, they can't take any further action against you to recover your debts.
How much of my debt will bankruptcy write off?
Bankruptcy will write off the entirety of your debts with only a few exclusions such as court fines, loans from the Student Loans Company and child maintenance arrears.
All debts covered by bankruptcy are written off with a one-time administration fee.
You will be automatically discharged from bankruptcy after a maximum of one year.
Once your Bankruptcy Order has been approved, an appointed administrator will take charge of everything for you, including handling all correspondence with your creditors.
After filing for bankruptcy, you will have no further contact with your creditors.
You are allowed to keep some items that are classed as ‘exempt goods’ such as tools you need to do your job, household items and a car if you need it to get to work.
In order to claim bankruptcy, you must pay a one-off administration fee of £680.
Bankruptcy has an immediate impact on your credit score and will stay on your credit report for 6 years.
Your bankruptcy will be published publicly.
After claiming bankruptcy, you will lose control of your most of your assets including a home. You may be able to keep some items classed as 'exempt goods'.
Employers and landlords may ask questions about recently-filed bankruptcies. Meaning you could potentially lose your job or your home and securing a job or a tenancy may be more difficult in the future.