How Does Personal Bankruptcy Works?

Bankruptcy is insolvency that is best for individuals who are unable to repay their debts as they become due. Any of your assets will usually be sold to recover the debt. This means personal bankruptcy may be suitable if your assets are valued more than your entire debts. Besides, you can keep up paying your debts on time, bankruptcy should not be an option to consider.

Moreover, most of your unsecured debts will be written off when you are bankrupt. This can give you a brand new start on your finance. However, personal bankruptcy duties would merit restrictions that you must be aware of.

Commonly Asked Questions About Bankruptcy

How much will it cost to file for bankruptcy?

The fees and costs of bankruptcy depend on where you reside in the UK.

If you live in England and Wales, the total cost is £680. This consists of a £130 fee that goes to the adjudicator and a £550 for the official receiver.

If you’re living in Northern Ireland, the costs will comprise £144 court fee, a £525 bankruptcy deposit and £7 solicitor’s fee, amounting to £669 in total.

How does bankruptcy work?

Almost all your unsecured debts will be written off when you file for bankruptcy. It allows you to have a brand new start yet has effects on all aspects of your financial life.

Personal bankruptcy normally lasts for a year in the UK. You will be restricted to obtain new credit that’s more than £500 within this period without informing the creditor about your bankruptcy. Also, you must let your OR or official receiver know should there be any changes in your situation.

Moreover, when going bankrupt, you’ll be urged to sell all your assets or valuable belongings but exempting the goods that are deemed essential.

Does going bankrupt clear all your debts?

Going bankrupt will clear most of your debts, but not all. Debts that are written off during discharged are most of your unsecured debts.

This means some of your debts, especially the unsecured ones will not be included in your bankruptcy. Examples are your child support or maintenance arrears, council tax debts, criminal fines and the others alike.

What can happen after my bankruptcy discharge?

Your debts are written off and restrictions will be lifted when you’re discharged from bankruptcy. However, if your bankruptcy involves fraud and dishonesty or any behaviour that is undesirable to the bankruptcy rules, your OR might extend your restrictions by means of bankruptcy restriction undertaking or order. These are known as BRU or BRO.

Instead of enduring the restriction for a year, it will extend for up to 15 years. Also, your bankruptcy records will be visible on the Insolvency Register if you live in England and Wales, while Northern Ireland bankruptcy will be recorded in the Bankruptcy Register. The record remains for up to three months after your discharged and might be longer if you are under BRU or BRO. Besides, your OR will discern whether you still need to satisfy certain payments on your bankruptcy when necessary.