Sometimes, there’s simply no way to repay what you owe in a reasonable time.
If your debts are particularly high and / or your income is low, you may need to think about declaring yourself bankrupt.
Like an IVA (Individual Voluntary Arrangement), bankruptcy is a form of insolvency: it’s a legal process that will share out your assets fairly among your creditors, protect you from further legal action and upon successful completion (normally after 1 year), write off your outstanding debt allowing you to make a new start.
Pros Vs Cons
- A quick procedure as in the majority of cases you would be discharged within 12 months
- Releases you from creditor pressure
- Debts are written off
- Benefit Only Income – No payments would be taken from your benefits.
- You could lose any assets of value if these are sold by the Official Receiver or Trustee appointed over your case. (Household items are excluded)
- If you have equity in your property, the Trustee appointed will look to realise the equity to repay fees and creditors
- Your credit file will be affected for 6 years
- If you have a disposable income available, then An Income payment order / agreement will be enforced for 36 months
- Your information is placed on the Register of Insolvencies which is a public register
- Bankruptcy may affect certain employments
- You can’t obtain credit of more than £500 without disclosing you are bankrupt
- To petition for your own bankruptcy costs £680, although it can be made in instalments