Is bankruptcy right for you?
Bankruptcy may be one of a range of debt solutions available for you to clear all of your debt and become debt free. However, what’s right for you depends entirely on your individual circumstances and how you want to deal with your situation.
Advantages of bankruptcy
- You keep your household goods, personal effects and tools of your trade (which could include your car) and a reasonable amount of income on which to live.
- Bankruptcy usually lasts for one year after which you are released from your debts and you can make a fresh start.
- Creditors cannot take further action against you, unless debts are secured on your home or other belongings.
- Your home may not need to be sold if you are able to arrange the sale of your share of the property to a partner or relative.
- You will no longer need to deal with your creditors which will ease the pressure.
Disadvantages of bankruptcy
- You will have to pay fees of up to £600 if you apply to the Court yourself (sometimes more if you apply through a solicitor or licensed Insolvency Practitioner).
- Your employment could be affected.
- You cannot act as a company director.
- Certain professionals are barred from practising if made bankrupt.
- Some of your possessions could be sold and these could include your car or luxury items.
- Some debts, such as court fines and student loans will not be written off.
- You may have a bankruptcy restriction order made against you even after your discharge from bankruptcy if it is considered that you took out debts knowing that you did not intend to pay them back. This order can last for up to 15 years.
- Your bankruptcy is published in your local newspaper and entered on a public register.
When the debtor petitions for their own bankruptcy, they have to pay a court fee of £175, unless they are eligible for exemption or remission.
They would be exempt if they are in receipt of certain state benefits such as Income Support, Income based Jobseeker’s Allowance, State Pension Guarantee Credit, Working Tax Credit but not in receipt of Child Tax Credit or Income-related Employment and Support Allowance.
Where they are not exempt but paying the fee would cause financial hardship they can apply for the fee to be waived or reduced, which is called remission, they will need to complete Form EX160 to apply which should be completed after reading “completing form EX160″ Form EX160a.
For help on completing the EX160 you will need the EX160a Form
They must also pay a deposit of £525 with the petition for bankruptcywhich cannot be waived or reduced. Therefore the total cost for bankruptcy is £700