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Bankruptcy (BKY)
Bankruptcy is a formal court procedure which you can start yourself if you can’t pay back your debts, as well as applying for bankruptcy yourself, someone else you owe money to (a creditor) can ask a court to make you bankrupt, even if you don’t want them to.
They can only do this if you owe at least £5000 or more. Your assets (with certain exceptions) are sold to help pay your debtors. However you can usually keep your personal belongings, the contents of your home and your tools of trade (which may include your car) unless they have a high value.
If you have surplus income after meeting your essential household and personal expenses, you may have to make payments out of your income for up to 3 years. Your assets and income are dealt with by a licensed and regulated Insolvency Practitioner or by a government official called an Official Receiver. Bankruptcy usually lasts for one year and once you have been freed (discharged) from your bankruptcy, you are released from your debts (with certain exceptions).
They can only do this if you owe at least £5000 or more. Your assets (with certain exceptions) are sold to help pay your debtors. However you can usually keep your personal belongings, the contents of your home and your tools of trade (which may include your car) unless they have a high value.
If you have surplus income after meeting your essential household and personal expenses, you may have to make payments out of your income for up to 3 years. Your assets and income are dealt with by a licensed and regulated Insolvency Practitioner or by a government official called an Official Receiver. Bankruptcy usually lasts for one year and once you have been freed (discharged) from your bankruptcy, you are released from your debts (with certain exceptions).
Advantages
- Usually discharged after 12 months.
- Once discharged from the Bankruptcy, all included debts are written off giving you a fresh start.
- The Bankruptcy fee can be paid online in instalments, your bankruptcy application will start once your fee has been paid in full.
- Bankruptcy will prevent further creditor legal action.
- All interest and charges will be frozen
Disadvantages
- Certain debts cannot be included in a bankruptcy, student loans, CSA arrears and court fines are typically excluded in bankruptcy.
- Bankruptcy costs £680.
- Bankruptcy will adversely affect your credit rating and, your ability to gain credit will be limited.
- Bankruptcy will remain on your credit file for 6 years.
- Once you are declared bankrupt an Official Receiver or Trustee will take control of your estate which could result in any assets being sold.
- If you can afford to make a payment, you may be asked to make a monthly contribution for a maximum period of 3 years.
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