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Bankruptcy
Bankruptcy is an option open to UK individuals and households who are insolvent (in other words, people who cannot pay off their debts). You can file for bankruptcy voluntarily, or it can be asked for by a creditor if you owe more than £750.
Of all the solutions to debt problems, bankruptcy counts as the most drastic, with the longest lasting consequences. You should always seek advice before going ahead with it because there are implications that you may want to avoid. For example, homes and cars can be taken away and it can be extremely difficult to get credit or a mortgage after bankruptcy.
The main alternative to bankruptcy for many people is an IVA and ClearStart will work hard to show you all of your possible options. However, there are circumstances when bankruptcy can be the only choice. In particular, you may need to consider it seriously if;
- there is no chance of being able to set up an alternative such as an IVA
- you have no assets and no available income
- you have retired, or you have no future need for credit.
| Advantages of Bankruptcy | |
|---|---|
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All unsecured debts are written off, except for student loans |
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You may be able to make a fresh start after twelve months depending on the conditions of your discharge. |
| Disadvantages | |
|---|---|
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You may have to sell your home and other assets such as cars worth more than £500 |
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You won't be able to get credit during the period of bankruptcy |
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Credit is very difficult or expensive to get afterwards |
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A bankrupt cannot have certain careers or be a director of a company |
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Your situation may be made public |
Further reading:
Bankruptcy | Bankruptcy process | Bankruptcy Law | Alternatives to Bankruptcy | Effects of Bankruptcy | Bankruptcy vs IVA | Disadvantages of Bankruptcy | Bankruptcy FAQs
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