Bankruptcy is a formal agreement between you and your creditors to repay what you can afford over a period of usually 12 months. Once this period has ended all outstanding debts are written off in full.

With bankruptcy, an ‘official receiver’ takes control of your debts and assets for you and liaises with your creditors.

As part of the bankruptcy application, a means test is carried out to see if you can afford even a small monthly repayment towards your debts. If you cannot, you will not need to make any repayments at all.

As with any formal debt solution, it is important that you speak to a bankruptcy professional to ensure that you fully understand the implications of going bankrupt.

To be eligible for bankruptcy you must be unable to find a way to ever repay your debts.

Below are the main advantages of going bankrupt. To learn more, please get in touch.

• Debt written off – all debts included in your bankruptcy are written off.
• No further creditor action – creditors are prevented from taking any further action against you.
• No more charges or interest – charges and interest are frozen.
• No creditor contact – your creditors will be prevented from contacting you further.
• No repayments – depending on your financial circumstances you may not need to make any repayments towards your debts.

Below are the main disadvantages of going bankrupt. To learn more please get in touch.

• Selling your assets – your assets, including your home (if you own it) and vehicle may have to be sold to cover outstanding debts.
• Details added to a public register – details of your bankruptcy will be entered into a public register.
• Credit Applications – during your bankruptcy you may be restricted from applying for further credit.
• Bankruptcy fee – there is a fee of £680 that needs to be paid to the Insolvency Service at the time you submit your application.
• Restricted employment – you may be prevented from holding certain types of employment.
• Credit rating – your credit record will be affected for 6 years.