Bankruptcy is not a measure anyone makes lightly, and it’s important you receive sensitive, tailored advice from a specialist if you decide to file for bankruptcy.
The number of individual insolvencies in the UK has fallen in recent years, from a peak of just over 35,000 per quarter in 2009 to around 20,000 per quarter in 2015, and bankruptcy orders have dropped from close to 20,000 to less than 5,000. But even though it’s less common, we know that doesn’t make it any easier for you to handle.
If you are facing severe financial difficulties or personal insolvency, it is vital that you seek advice from qualified legal experts before selecting a course of action to take. Personal bankruptcy is just one of a number of options, and experienced professionals can help you make the right choice.
What is bankruptcy?
Bankruptcy is a process whereby your assets are used as contributions to settle your debts. These assets could include possessions, any property you own, or even your income.
If you are facing debts that you cannot pay off in a reasonable time, you can file for bankruptcy yourself in order to put your case through the courts. In some instances, bankruptcy orders are made against people by their creditors.
Why should I file for bankruptcy?
Bankruptcy can be a way to give yourself a fresh start with your finances, by writing off all your unsecured debts in order to come to a settlement with your creditors.
The point at which people are generally advised for bankruptcy is when their assets are worth less than their debts. If you have enough money to keep paying your debts, then bankruptcy is unlikely to be the best option for you, as it would mean losing assets such as your house or your car.
Bankruptcy is an option that should be examined when most of the other financial management options available have already been explored or attempted, and the financial solicitors we have can discuss these with you to establish whether or not filing for bankruptcy would be best in your circumstances.
What is the cost of bankruptcy?
There are three court fees to pay during the bankruptcy process.
First is a court fee of £150. It is important to seek advice from legal experts before paying this fee or embarking on bankruptcy proceedings, as you may be exempt from the fee in certain circumstances, such as if you are on income support.
The next charge is a £325 deposit towards the administration costs. Everyone who wishes to file for bankruptcy has to pay this cost to enable the court to process their case.
The final cost is for the statement of affairs, which involves a £7 charge if you make the statement before the court or a solicitor. This fee does not apply if you are filing for bankruptcy through a county court.
There may be other considerations to take into account depending on your circumstances when you file for personal bankruptcy. For example, married couples both have to pay separate fees, but partners in a business can apply for a joint bankruptcy petition under the Insolvent Partnerships Order 1994.
I have no hope of paying my debts in a reasonable time – what should I do?
You should speak to an experienced financial solicitor who can establish whether bankruptcy is the form of insolvency action that will best serve you.
First4lawyers can help you to examine all of the options available to you, before making an informed decision. If bankruptcy emerges as the best option, then we can help you regarding the relevant forms and paying the costs described above.
If your submission is successful, your debts are written off and your creditors won’t be able to take any further action against you. Your personal bankruptcy will last for a year, during which time you won’t be able to borrow any money and you will need to declare any changes in your circumstances to the official receiver.
I have had a bankruptcy order made against me – what should I do?
Dealing with bankruptcy orders can be a stressful and complex process, but you can
contact us today and we will help you establish the best approach to take, and provide you with any legal representation that might be required if your case goes to court.