We’ve answered some of the most common FAQs about bankruptcy. This should clear up any confusion you have and help you to understand the debt solution a bit better.
Saying this, we still strongly recommend that you get qualified legal and financial advice before you make any decisions.
During bankruptcy, you will be required to tell your Trustee – the person in charge of your bankruptcy – about any changes to your financial circumstances.
If your circumstances change for the better, you might have to start paying into an Income Payment Agreement (IPA) or Income Payments Order (IPO). Or if you’ve already got an IPA/IPO, you might have to increase what you pay into this. And if you get any money through a windfall or inheritance before the end of your bankruptcy, you might have to pay this towards your creditors too.
If you don’t tell your Trustee about changes to your circumstances, your bankruptcy may last longer.
The total fee to go bankrupt in England and Wales is £680.
This is made up of the Official Receiver’s fee of £550 and the application fee of £130. You can pay this fee online in instalments if you can’t afford to pay it in one go. However, your bankruptcy application will not be processed until you’ve paid the full fee.
Bankruptcy will appear on your credit file for six years after the date you first start it. If you apply for credit while it’s still on your credit history, lenders might be more likely to reject you. Or if they accept you, this might be at a higher rate of borrowing.
It’s also important to be aware that some lenders will ask you if you have ever been made bankrupt when you apply. As a result, bankruptcy could have an impact on your ability to get credit for a substantial period of time.
If you meet all of your bankruptcy obligations, you are likely to be discharged 12 months after you were first declared bankrupt. You may still be required to make monthly payments for up to three years. Whether or not you’ll have to pay anything will depend on your individual situation.
But if your Trustee thinks you have acted irresponsibly with your finances during this period or not co-operated, your discharge may be delayed.
Bankruptcy is only for unsecured debts – that means no mortgages or car finance loans. But there are some other loans you can’t include in bankruptcy.
- fraudulent benefit and tax credit overpayments,
- child maintenance arrears,
- court fines,
- student loans, personal injury claims made against you, and
- any debts you took out fraudulently.
When you go bankrupt, the Official Receiver will tell your creditors about this. This means they won’t be able to directly pursue you to repay those debts. Instead, they will deal with the Official Receiver initially. And after this, they’ll deal with your Trustee.
Your creditors will have to provide details of the debts you owe. This is so they can make a claim. And after your bankruptcy, your debts in the bankruptcy will be written off.
Even though you won’t technically owe anything towards these debts anymore, you still might have to pay something to your creditors. If you can afford to pay after your essential bills and other expenses, you might have an Income Payment Agreement (IPA) or Income Payments Order (IPO) for up to three years.