What's Your Problem ?

I've got lots of debts. Should I declare myself bankrupt?

You should think about the likely consequences of bankruptcy before petitioning. To petition for bankruptcy you must owe at least £750 and you'll remain bankrupt for 3 years (2 years in some cases). It costs £390 to petition for bankruptcy (£140 fee plus £250 deposit). You may be able to apply for the fee to be reduced and if you get certain benefits you can be exempt from paying the fee. Payment of the deposit can't be waived or reduced. You'll also have to pay for a certificate of discharge. When you're made bankrupt, a notice will appear in your local paper. If you own your own home, it may be sold to repay creditors. If you rent, the landlord might not want to rent to an undischarged bankrupt. Anything of value, excluding possessions essential for domestic life, can be sold to pay creditors. The Official Receiver or Trustee in Bankruptcy will control your finances and any money you get will be used to pay off debts. You may have to make contributions from wages to repay creditors. Your bank account will be closed and it may be difficult to open a new one. You'll also need the permission of the Official Receiver to have credit above £250 so you may need a prepayment meter to pay fuel bills. There are some jobs and public offices you can't do while bankrupt. You can't carry on business in a different name without telling anyone that you do business with the name in which you were made bankrupt. You need to check your contract of employment to see whether you'll face disciplinary proceedings if you go bankrupt. You may have problems getting a bank account, private tenancy, mortgage or credit, even after discharge, because details will be on your credit reference file. The advantages of bankruptcy are that it may force your creditors to accept less or nothing at all and nearly all remaining debts are written off when you're discharged. Creditors can't enforce payment of debts but mortgage lenders can still repossess your home. Contact your local CAB for more advice. Bankruptcy may not be your only option.

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