A guide to Bankruptcy

WHAT IS BANKRUPTCY

This is where you have legally declared that you are no longer in a position to pay any debts and the proceeds of your assets are sold off to your creditors. This should be the last resort for any borrower once they have exhausted all their efforts in trying to pay back what they owe.

Once you declare yourself bankrupt you can be free from all unsecured debts, pay back less and stop creditors chasing for payment.

However you have a huge risk of losing everything you own including your house and bankruptcy can prove to be very expensive.

There are two ways to become bankrupt. You can either file your own bankruptcy petition where you obtain a form from your local county court fro £150 plus a £310 deposit or a creditor can make you bankrupt if you owe an unsecured debt of over £750.
Once this has been filed an official receiver will need to be appointed to protect your assets. You will also need and Insolvency practitioner who will act as a trustee to sell your assets to pay your creditors.

The bankruptcy generally lasts for 1 year by which time you will be discharged and during this time you will not be allowed to get further credit of more than £500 without telling the lender you are bankrupt and will not be allowed to use any credit/store cards.