if you’re struggling to deal with your debts and are unlikely to pay them off in a reasonable amount of time bankruptcy could be a solution for you. Bankruptcy is a legal process where your debts are written off. Your finances will be overseen for a year by an official receiver from the Government Insolvency service they will investigate your situation and get in touch with all your creditors. Almost all types of debt will are written off if you go bankrupt meaning you can make a fresh start and because bankruptcy is legally binding your creditors can take any further action to try and collect your debts.
They can’t contact you after you’ve been made bankrupt either. However, bankruptcy can have serious implications and it’s not a decision to be made lightly. If bankruptcy is the right solution for you it’s important to understand how it can affect your life. If you decide to go bankrupt, the assets you own may be sold and the money from this will be paid towards your bankruptcy. This means you may have to sell your home or your car and you’ll lose any savings or shares although in most cases your pension savings will be safe.
If you rent your home, bankruptcy could affect your tenancy agreement or it might make it hard to get a new tenancy and you may find that your job is affected too especially if you work in the legal or financial sectors. Your credit file will be impacted by bankruptcy meaning that it might make it difficult to take further credit in the future. You’ll also face other restrictions during your bankruptcy for examples on the amount of money are allowed to borrow.
The official receiver may also order you to make monthly payments to them for three years after your bankruptcy if you can afford to. There is a cost to going bankrupt too and you’ll need to pay the fees before you apply. With any debt solution, it’s important to get debt advice to make sure it’s suitable for your situation