What happens if I go bankrupt?

There are an increasing number of people here in the UK in financial difficulty for a variety of reasons. Whether that is due to your business ceasing to trade, over-committing yourself financially or perhaps being made redundant and therefore struggling to meet your commitments. There are a number of potential options open to you to deal with your financial situation such as liaising with your creditors yourself, entering into a debt management agreement, an individual voluntary arrangement or going bankrupt. In any event, you would be well advised to obtain professional advice from the likes of the Citizens' Advice Bureau as to the best way forward in dealing with your situation. This articles seeks to offer yo a factual outline to answer the question: What happens if I go bankrupt? What is bankruptcy? If you have insufficient money to meet your debts or it will take many years to clear them you could consider applying to be made bankrupt by way of a court order or, indeed, someone that you are in debt to could do likewise even though you may not want this to happen. Having been declared bankrupt any debts that you have are usually written off after one year although certain assets that you possess such as your home may need to have been sold and the proceeds used towards reducing your indebtedness before this happens. How do you apply to be made bankrupt? You will need to submit a bankruptcy petition together with a statement of affairs along with the fees to the county court near where you live although if you live in London your application should be submitted to the High Court. The information you will provide will include such things as details of your income and expenditure, assets i.e. property and valuables, bank and building society accounts and a list of your creditors. At court you will swear an affidavit confirming that the information provided by you is correct as it is a criminal offence if it is not. Having done this, your case will either be heard straight away or on another occasion. If the court agrees with your application it will issue a bankruptcy order when your bank and building society accounts will be frozen and the Official Receiver will be appointed to take control of your finances. Official Receiver An interview will be arranged between you and the Official Receiver either in person or over the phone when you may be asked to complete a questionnaire that requests a lot of the information provided on the statement of affairs previously submitted to the court. The Official Receiver will notify your creditors of your bankruptcy and arrange for your debts to be cleared/reduced from the monies realised from your savings and the sale of your assets such as your home. Usually, after 12 months, you are released from the bankruptcy order and any debts remaining would be written off allowing you to make a fresh start. Credit rating The Insolvency Register, which is a public record, will retain a note of your bankruptcy until 3 months after you have been discharged from bankruptcy and the record of your bankruptcy will appear on your file with the credit reference agencies for 6 years. This may affect your ability to obtain credit/obtain certain other services from banks and building societies both during bankruptcy and after. For instance, you may be unable to operate a normal type of bank current account that provides a debit card, cheque book and overdraft facility although may still be able to open a basic form of current account providing reasonable access to your money enabling you to pay bills, buy items in shops and online and get cash out. So, bankruptcy really should be a last resort as it may well result in you losing your home that you may have owned for many years and affect your ability to obtain credit for several years. If you are seriously considering declaring bankruptcy and would like to speak to someone about your options and get a more personal answer to the question "What happens if I go bankrupt?" suited to you then we can put you in touch with an Adviser that can offer you a fee consultation to discuss your options at no obligation and under no pressure. To find out more either call us on 0845 1260350 or complete our Debt Management Enquiry form and we'll get in touch with you.