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Tackling your debts

How to declare yourself bankrupt in England

Posted 22 June 2016

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Bankruptcy can sometimes help with unmanageable debts. Find out how to declare yourself bankrupt in England.

In England, Wales and Northern Ireland, there are a number of ways you can deal with debts that have become unmanageable. Bankruptcy is one solution available in these countries, and if you live in Scotland, Sequestration is the equivalent solution. 

You can become bankrupt because your creditors have made you bankrupt or because you applied for it yourself. Today we’re going to look at how you can make yourself bankrupt and, importantly, when it’s appropriate to do so. 

How to declare yourself bankrupt?

Before you declare yourself bankrupt, you should get expert debt advice. You can get this advice for free by speaking to one of our advisors using the options to the left, or by visiting the Money Advice Service

You now apply for bankruptcy online instead of in person. In most cases, this means the process is faster, simpler and less worrying, as you won’t have to appear in court. You can start the application and learn more on this Government page

You’ll need some paperwork like wage slips, benefits or pensions statements, bills, and letters from bailiffs or enforcements agents if you have them. You create your own account online and you can start the application and come back to it at a later time if you need to.

The cost of going bankrupt is £655. This is the combined cost of an administration fee of £525, and the Adjudicator fee of £130. You can pay this in instalments, but the system won’t let you submit your application until the fee has been paid in full. 

When you’ve completed the online application, it’ll go to a Government official employed by the Insolvency Service called an Adjudicator. They will decide whether or not to accept your application.

Help with applying online

You’ll find that the process will be easier if you get all your paperwork ready before you start. 

If you’re not confident using the online system, you can ask a trusted family member or friend to help you with it, or contact a debt specialist for help. 

If you’re worried because you can’t afford the bankruptcy fee, you might be able to get help with this from a charity – search for a grant at Turn2us. Some energy suppliers have schemes to help people with these sorts of fees, so make sure you check your supplier’s website. 

How does bankruptcy work?

Bankruptcy is only suitable for people who are insolvent. This means that you can’t afford to pay your debts when they’re due and/or your debts total more than your assets. 

When you become bankrupt, it normally lasts for a year. Over that time, a Trustee (a court official) will oversee everything and make sure that as much money as possible is put towards your debts. Some people have to pay towards their debts each month – called an Income Payment Agreement (IPA), and this normally lasts for three years. 

Your Trustee will only tell you to start an IPA if they can see you can afford to do so and pay all your other essential expenses. You won’t be asked to start an IPA if your income is made up solely of state benefits.

So in the right situation bankruptcy can provide a financial lifeline to people who are insolvent. 

Is bankruptcy the right way to go?

Using bankruptcy to solve problem debt can work very well in some cases, but it also has serious consequences for your life, some of them negative. 

Bankruptcy should only be used as a way to deal with insolvency if no other solution is right for you. This is because bankruptcy puts your assets at risk – meaning you may need to sell anything you own of value, including your home. This may not happen if your home is in negative equity or is modified to accommodate for someone with a disability. 

Some types of employment can also be affected. For instance, there are some jobs in the financial sector or law enforcement that require you to be registered or to go through a credit check that may not be compatible with bankruptcy. In most cases you don’t have to tell your employer about your bankruptcy, but you should always check your employment contract carefully to be sure. 

Bankruptcy, like all debt solutions, will have a negative effect on your credit history. The fact you’ve not kept to your original contractual agreement will show there for six years from the date you become bankrupt. In the future, lenders will be able to see this and they may be less likely to lend to you, or raise the rate of interest you have to pay. 

It’s important that you look at the whole picture and you seek professional debt advice before you declare yourself bankrupt. If you were to rush into a debt solution without having given it proper thought and speaking to an expert, you may later find there was another option that would have been more suitable for you. 

You’ll probably find that a weight is lifted off your shoulders just by having a conversation about your situation and getting sound advice. Why not get in touch with one of our advisors today to find out whether bankruptcy is right for you?

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.