What happens when I go bankrupt?
If you’re thinking about going bankrupt it’s important you get the facts and understand the process to ensure it is the right solution for you.
Going bankrupt isn’t permanent, so it can be an effective way of clearing your debts and making a fresh start.
What happens during the bankruptcy process
The bankruptcy procedures throughout the UK are generally similar but there are procedural differences depending on whether you live in England and Wales, Scotland or Northern Ireland, so it’s important to understand the distinctions.
Here’s what you need to know about going bankrupt
- If you are a UK resident you can petition to be declared bankrupt
- In order to become bankrupt a court has to agree to it and issue a bankruptcy order against you
- You may be interviewed by the official receiver about your situation
- You will normally be discharged from bankruptcy after a year
- When the bankruptcy is over the money you owe is usually written off and this may be after just a year
- Creditors can’t chase you or harass you for money if you’re bankrupt
- You are allowed to keep certain possessions and a reasonable amount to live on whilst you’re bankrupt
- Being bankrupt imposes serious restrictions
- You must pass control of your assets to the official receiver / trustee
- You may lose your home
- The bankruptcy details are entered on the Insolvency Register
- Bankruptcy is recorded on your credit file for six years
- Depending on your financial circumstances you may have to make a regular contribution to your creditors for up to three years
- You have to pay the courts costs and fees which can be up to about £700
- Some professions don’t allow people made bankrupt to continue working
- A bankruptcy petition order can be made against you if you don’t cooperate and abide by the terms
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