Is bankruptcy the answer to your debt problems?

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Is bankruptcy the answer to your debt problemsThe simple answer is that it might be, it depends on the circumstances. Your own particular circumstances are the key to the solution as every debt problem is different. If you come across a website that tries to answer that question online or through some gimmicky debt calculator then ignore it as it is not going to provide you with the considered and specific expert advice you need.

First things first

If you think you are in so much debt with little chance of repaying it that you are considering bankruptcy then the first thing you should do is work out just how much you really do owe. You also need to detail what your assets are and if you have any outstanding debt on those assets. The final factor to take into account is your income and you normal living expenses.

Having these figures available will enable you in the first instance to work out if you would qualify for bankruptcy. Many people ask the question what is bankruptcy and how do I qualify. Here is the criteria for bankruptcy in Scotland, you must:

  • Owe at least £1500 in total
  • Live in Scotland or have lived in Scotland sometime within the last year
  • Not have been made bankrupt in the last five years
  • Be able to pay the application fee of £200

You must also be able to meet one of the following points:
One of your creditors must consent to you making yourself bankrupt. This is called creditor concurrence.
or
You are apparently insolvent. This is a legal term that means you are unable to pay you debts on time.

The low income low assets route to bankruptcy

If you have low income and low assets then there is a simplified route to bankruptcy which is sometimes referred to as LILA.

At the time of writing, low income is classed as having a gross weekly income of no more than the standard national minimum wage for a forty hour working week, which is currently £247.60 per week. If you receive pensions or maintenance payments then this will also be counted as part of your income.

The assessment of low assets works on having no single asset that is valued at more than £1,000 and the value of all your assets must be no more than £10,000. As part of the LILSA criteria you are not allowed to own or jointly own a house or any other land or property.

Seek professional advice

Bankruptcy is a formal debt solution but it should be seen as a last resort and it carries a number of financial and personal implications that you must be aware of and take full consideration of.

The best way to ensure you have all the information on bankruptcy you need and can best relate that to your own particular circumstances is to seek professional advice from an expert debt advisor.

An experienced debt advisor will listen to your problem and take full account of your financial circumstances in order to assess what would be the best solution for you. There are alternatives to bankruptcy and these should also be explored to find out if any of those may provide the best option.

At the end of the day the decision will be up to you but make sure you have all the facts before deciding.

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