Am I eligible for bankruptcy?

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Do I qualify for bankruptcy?

You can apply if you live in England, Wales or Northern Ireland. If you live in Scotland, you will need a different option called Sequestration.

It costs £680 in England, Wales and to apply for bankruptcy. You can pay this a little bit at a time to make it easier. However, you must pay the full amount before your application goes through. If you’re struggling with the fee, some charities and grants might be able to help you pay it.

Is bankruptcy the right solution for me?

Bankruptcy is often a final step when you see no other option. It might be a good choice if you cannot pay back what you owe and your situation is not likely to improve. It works best for people who do not own a house or items of value.

It can impact your life a lot. For example, it can make it hard to start a new business.

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When is bankruptcy unsuitable for me?

We can help you find a different route if you have more than £50 to spare each month. In that case, another choice might be better for you. We will also look at other options if selling your things or your house could clear your debt.

You should check your work contract before you apply. Some jobs will not let you keep working there if you go bankrupt, especially if you work with money.

You have to include debts you share with others. However, the other person will have to pay their own debts.

Bankruptcy also will not clear everything. You will still need to pay student loans, court fines and child support. Sometimes, the Child Support Agency or Child Management Service might agree to clear that debt if you explain your situation, but this is not guaranteed.

Can I go bankrupt with a County Court Judgement (CCJ)?

Yes, a CCJ can be part of your bankruptcy. If you have run out of options, this can be a very good way to deal with this type of debt.

Bankruptcy stops you from having to pay the CCJ. But the CCJ will still show on your credit report for six years from the date you received it. You’ll need to know this if you want to borrow money in the future. Bankruptcy also stays on your credit file for 6 years, so you may struggle to get accepted for credit either way once it is complete.

It also means the creditor cannot take further legal action or send bailiffs to your home. Once your bankruptcy is agreed, it is very important that you stop making all payments to that creditor.

What other debts can be included?

You can include a wide range of other debts. It can clear credit cards, utility bills, store cards and overdrawn bank accounts. You can also include overpaid benefits arrears and car finance. If you include a car on finance, you will need to give the vehicle back to the company.

Not sure if bankruptcy is right for you? Get clear, expert advice today?

Get free debt advice online or call 0800 316 1833 to speak to one of our experts. We’ll explain the solutions available, check what you may be eligible for and help you choose the option that best fits your situation.

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FAQs

Who informs my creditors of my bankruptcy?

Once approved for bankruptcy, you will stop dealing with the creditors included in your bankruptcy, and making payments, and they will be unable to take any legal action against you. You will be assigned a Trustee to contact the creditors during your bankruptcy on your behalf.

Can I continue to apply for credit while I am bankrupt?

It is illegal to apply for £500 or more of credit while you are bankrupt without informing the lender that you are bankrupt. In any case, most creditors would run a credit check on you and discover the note on your credit file, which lasts for six years following the date you filed for bankruptcy. We would, therefore, not recommend applying for credit until your file is clear as if you’re refused credit, this can have an additional negative effect on your credit rating.

Can I cancel bankruptcy?

You can cancel bankruptcy, which would lift the restrictions on you and the impact on your credit rating sooner, but you can only do this if one of the following reasons applies:

All of your debts and fees for your bankruptcy have been paid in full by either you or a third party.
You’ve set up an Individual Voluntary Arrangement (IVA) instead.
The bankruptcy was set up in error.

How long will my bankruptcy last?

Bankruptcy will normally last for 12 months, after which time your debts are written off at the end of bankruptcy. If you have a surplus income of more than £20 a month, you may also be required to pay into the bankruptcy for up to three years.

You won’t be required to make a payment from your income if you are just in receipt of state benefits.

How much does it cost to file for bankruptcy?

There is a £680 fee to file for bankruptcy, but you may be able to get support to pay this through a charity or a grant, should you meet the criteria. This fee can be paid in instalments but bankruptcy proceedings can’t start until it is paid in full.