Bankruptcy in the UK
If you can't manage your debts you can apply to be made bankrupt, your creditors can also apply for you to be made bankrupt if you owe more than £5000. Bankruptcy isn't the only option you may also want to consider a debt relief order.
So what's the benefit of being bankrupt?
Bankruptcy allows you to make a new start, usually after a year.
When you are bankrupt your creditors have to stop all proceedings and you are allowed to keep some of your property which is essential for living. The amount you owe can also be written off
The disadvantages of being bankrupt ?
Bankruptcy ruins your credit file and stays on it for 6 years.
You can lose your home, pension and business.
Your bankruptcy will be publicly published
You will be required to pay a fee and might be required to pay towards your debt for 3 years if you earn over a certain amount.
Bankruptcy Restriction Order
Even after Bankruptcy is over you can have a bankruptcy restriction order which restricts your financial affairs.
The Bankruptcy Process
Before a third party can make you bankrupt they will have had to get a statutory demand which gives you 21 days to reply to them . The third party will need to have also tried to enforce a court order with no success.
The third party can then apply for you to be bankrupt via the courts with a petition order. You can ofcourse challenge this.
The court can either dismiss the case, suspend the bankruptcy notice which gives you and the third party more time to come to an agreement or the court can issue a bankruptcy order.
Once a bankruptcy order is received an official receiver will take control of all of your finances.
If all works well, you should be discharged from Bankruptcy within a year.