Bankruptcy is often seen as a last resort. However it should not be. For many people (particularly if you are renting) it can be a far better option than a debt management plan or IVA.

Included in this article:

What is bankruptcy?
How to go bankrupt
Additional information

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Traditionally bankruptcy has been seen as a last resort. A solution be avoided unless absolutely necessary. However, in reality it is often the best option for dealing with personal debt. This is particularly the case if you are not a home owner – living in rented accommodation.

Bankruptcy lasts for just 12 months. In addition, you will not pay anything towards your debts unless you can afford to do so.

If you can afford to make a monthly payment towards your debt, you will have to do so. But these payments will only last for a maximum of 3 years. This is 2 less than a standard IVA and far less than a debt management plan.

After that your debts are taken away from you and you are no longer liable to repay them.

If you are a homeowner, going bankrupt does not automatically mean you will lose your house particularly if there is little or no equity in the property.

How to go bankrupt

If you decide to go Bankrupt, you can go through the process yourself if you wish.

However, it will be much easier and stress free if you take up our bankruptcy assistance service. This includes the following:

• Direct access to your personal advisor whenever you need to ask a question (no call centres)
• Ensuring your application form (including your income and expenses budget) is completed and submitted correctly.
• Ensuring you are properly prepared for your interview with the Official Receiver.
• Ongoing support from your advisor during the 12 months you are bankrupt

This service is particularly useful for self employed people in terms of income calculations (i.e. distinguishing between business income and personal drawings after a provision for tax).

Additional information from Wilmott Turner

More information about the Bankruptcy solution is available in the left hand column. However only a brief overview is given here. For more details and advice please see one of our dedicated information websites:

Bankruptcy Expert
Beat My Debt – Bankruptcy

Government advice about personal debt solutions

As well as the information found on this website the Government’s Insolvency Service has produced a useful guide to personal debt solutions which you might also find useful: “In Debt – Dealing with your creditors”.

Money Helper (provided by the Money & Pension Service) is an independent service set up by the Government to provide people with free advice about all aspects of personal finances. For further information, please follow this link: Help if you are struggling with debt.

It is also recommended that you read this one page document produced by the Money & Pensions Service entitled “Dealing with debt – 5 things you should know”.