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Tackling your debts

Can I go bankrupt without a lawyer?

Posted 20 December 2016 by Christine Walsh

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You don’t need a lawyer to go bankrupt, find out why here.

If you can no longer afford to pay your contractual payments towards your unsecured debts, bankruptcy is one option to deal with the problem. There are pros and cons to this solution and it will have certain effects on your life, so you should make sure you do your research before you go ahead and apply for bankruptcy.

If you’ve already looked into it a little, you may have heard that bankruptcy is legally binding. This is true, but does that mean you need a lawyer to go bankrupt?

 

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Do I need a lawyer to apply for bankruptcy?

The answer here is no, you do not need to appoint a lawyer if you want to go bankrupt. Although lawyers are there to advise and represent you in certain legal matters, it’s not necessary to have one during bankruptcy. This is good news, as this makes the process less complicated and it certainly makes it less expensive.

Is bankruptcy still legally binding?

Even though you don’t need a lawyer to go bankrupt, once it’s been agreed, it’ll still be legally binding for both you and your creditors. This means there are some rules that you have to abide by during your bankruptcy, but it also means you’re protected from any further legal action from your creditors. They also can’t contact you for payment during your bankruptcy, or when it’s over.

Who manages my bankruptcy?

If your application for bankruptcy is accepted, it will be managed and overseen by a Trustee. When you make your application, it will be dealt with by the Official Receiver – a civil servant in the Insolvency Service. This person can also go on to become the Trustee for your bankruptcy and manage it going forward. You don’t need to worry about this aspect of the process yourself – a Trustee is appointed for you.

The Trustee will look at your finances and decide if you can afford to put any money towards your debts each month. They are also in charge of deciding whether you need to sell your home, if you’re a homeowner.

Any payment you make towards your debts, will be at a reduced, affordable rate. The payment plan itself is called an Income Payment Agreement (IPA), and usually lasts for three years from the date your bankruptcy starts. If your income is made up solely of state benefits, you don’t have to pay anything towards your debts.

Can I apply for bankruptcy by myself?

You can apply for bankruptcy by yourself, however you should get professional debt advice before you do this. The advice doesn’t need to come from a lawyer – you can contact various debt charities or speak to one of our expert advisors free of charge.

This is important because there are other debt solutions available that you may be eligible for and that might be better for you. If you start bankruptcy and it isn’t the right solution for you, you might find that the negative effects of the solutions outweigh the positive ones in your case.

How do I apply for bankruptcy?

In England and Wales, you can now apply for bankruptcy online. The online application was introduced in April 2016, and as well as making the process simpler, has made it significantly less daunting, as a court appearance is no longer necessary.

To apply you have to provide certain information such as whether you’re a homeowner, how many debts you have, the names of our creditors and how much you earn.

There is a cost to going bankrupt. It costs £680 in total and this includes the Official Receiver’s fee of £550, and the administration fee of £130. It can be paid in instalments, but your application won’t be considered until it’s paid in full. You can start the application by following this Government link.

Unfortunately, the process is not online in Scotland and Northern Ireland. In Scotland it’s known as Sequestration and, if you want to apply, this has to be done through the Accountant in Bankruptcy. If you’re in Northern Ireland, there are some forms that you need to fill in.

The next steps

So now you know that you don’t need a lawyer to go bankrupt and the solution does provide legal protection as long as you stick to the rules. To learn more about the rules and restrictions of bankruptcy, have a look at our previous blog.

Remember, the most important thing you can do if you’re considering bankruptcy, is speak to a trained debt advisor. They will be able to get to the root cause of your debt problems and tell you whether bankruptcy is the best way forward. If you’d like to speak to one of our advisors today, just use one of the options at the bottom of the page.

by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.