What Happens When You Go Bankrupt in the UK?
Are you facing bankruptcy?
In the UK, bankruptcy is a legal process that can be used by individuals who are unable to pay their debts. When you go bankrupt, an insolvency practitioner will be appointed to manage your bankruptcy and take control of your assets.
Here is what typically happens when you go bankrupt in the UK:
You will be required to attend a bankruptcy interview: This is an opportunity for you to discuss your financial situation with an insolvency practitioner. You will be asked to provide details of your income, expenses, and debts.
Your assets will be sold: The insolvency practitioner will sell any assets you own, such as your house, car, or other valuable possessions, in order to pay off your debts.
You may be required to make monthly payments: If you have a regular income, you may be required to make monthly payments to your bankruptcy estate for up to three years. These payments will be used to pay off your debts.
Some of your debts may be written off: At the end of the bankruptcy process, any remaining debts will usually be written off. However, there are some types of debts that cannot be written off, such as student loans and fines.
Your bankruptcy will be recorded on your credit file: Bankruptcy will stay on your credit file for six years and may make it more difficult for you to obtain credit in the future.
It is important to note that bankruptcy is a serious financial step and should only be considered as a last resort. It is worth seeking legal advice
What are my options other than bankruptcy?
In the UK, there are several alternatives to bankruptcy that you can consider if you are struggling to pay your debts:
Debt management plan: A debt management plan is a repayment plan that is arranged with your creditors to help you pay off your debts over a longer period of time. With a debt management plan, you make one monthly payment to a debt management company, which is then distributed among your creditors.
Individual voluntary arrangement (IVA): An IVA is a legally binding agreement between you and your creditors that allows you to pay off your debts over a set period of time. With an IVA, you make monthly payments to an insolvency practitioner, who then distributes the money to your creditors.
Debt relief order (DRO): A debt relief order (DRO) is a type of debt solution for individuals who have debts of less than £20,000 and very little disposable income. With a DRO, you do not have to make any payments towards your debts, and any remaining debts are written off after a period of time.
Debt consolidation loan: A debt consolidation loan allows you to combine all of your debts into one loan, which can make it easier to manage your repayments. With a debt consolidation loan, you make one monthly payment to the lender, and the lender pays off your other debts.
Government debt advice: If you are struggling to pay your debts, you may be able to get help from a government-funded debt advice service. These services offer free, confidential advice and can help you understand your options and find the best solution for your situation.
Concerned that you are facing bankruptcy?
If you believe that you may be facing bankruptcy we suggest speaking with our legal team to assess your options. We may be able to find a solution, other than bankruptcy. Bankruptcy should be seen as a last resort.
Contact us today for a free, no-obligation quote.