What is Bankruptcy?

Any creditor you owe more than £750 or any creditor who has obtained a CCJ against you can petition for your bankruptcy.

You can also apply for bankruptcy yourself if youre struggling with debts that you cant afford to pay off and you dont think your financial situation is likely to improve. If the court agrees its your only way out of debt in a reasonable timeframe it will grant a bankruptcy order. Either way bankruptcy can legally write off a significant portion of your debts and let you make a fresh start once its over most of your unsecured creditors will have no further claim against you.However there are serious consequences in bankruptcy that sould be considered carefully:

  1. Its highly likely that youll have to sell your home to pay your creditors.
  2. Youll probably have to sell any expensive items including your car although you may be allowed to keep / buy a cheap car if you need it.

  3. Although most people are discharged from bankruptcy in 12 months you may have to keep making contributions to your creditors for up to 3 years.

  4. If the Official Receiver judges that your behaviour has been questionable a Bankruptcy

  5. Restriction Order BRO may be imposed which can last up to 15 years.
  6. Your bankruptcy will stay on your credit report for 6 years.

  7. Your bankruptcy will appear in the newspapers.

  8. You may lose your job if you work in certain fields and if you own a business it is likely to be closed down.

  9. Bankruptcy is a serious matter. Before you sign anything you should discuss the pros and cons in detail with a specialist adviser.