If you find yourself in the unfortunate position of being in debt and not being able to pay, you may have considered declaring yourself bankrupt. Here is a simple guide to understanding the process and implications of bankruptcy.
Applications for bankruptcy must be made online and will be looked at by an adjudicator who will make a decision on your case. The cost to apply is £680
If the adjudicator makes you bankrupt, you will be given a ‘bankruptcy order’. If you have assets, these may be used to pay off your debts. Your name and details will be put on the Individual Insolvency Register and you will be subject to bankruptcy restrictions.
Restrictions include not being able to borrow more than £500 without notifying the court, and some severe restrictions on managing a business.
After 12 months you will usually be released from your debts and the bankruptcy restrictions, although your assets can still be used to pay off debt, if you owned them during the bankruptcy period. The person appointed to manage your bankruptcy will act as a ‘trustee’, usually the official receiver (employee of the court). They will manage your assets
Your home and any legal or equitable interest in it may be sold to pay your debt. However, steps can be taken to prevent this, such as selling the title to a partner
You may be able to keep assets that include tools needed for work and household items such as clothing, and equipment. Bankruptcy will also be visible on credit checks for six years and you will find it extremely difficult to obtain any credit card, mortgage or loans within these 6 years.
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This article is written by our legal content writer James Chalkley (LLB. LLM.). You can seek further advice from James by booking an appointment with him.