Other Solutions and Advice - Bankruptcy

Many people who find themselves in financial difficulties often see Bankruptcy as the only way out. Bankruptcy should only be used as a last resort, if an individual has been down all other avenues without success.


There are a number of advantages to Bankruptcy, the first and most obvious, is that there is a definite end to financial problems, offering some degree of peace of mind. After the Bankruptcy order is complete (usually 12 months, but could be up to 3 years), any remaining debt is usually written off, allowing for a fresh start. Furthermore, the individual will no longer have to deal directly with their creditors, which will help relieve stress.


While Bankruptcy may seem like an ideal solution for many, there are disadvantages that should be considered. First and foremost is that any assets owned by the debtor may have to be sold. This could include your home, car or anything that may have significant value attached. It is also important to remember that a debtor looking at bankruptcy may still have monthly payments to make in order to pay back some of the debt. Bankruptcy does not just wipe the slate clean. Bankruptcy WILL affect an individual’s credit rating. It remains on a credit file for 6 years. During the period of bankruptcy, no credit of more than £250 will be lent without the lenders permission (ie the individual MUST declare their bankruptcy order). Details of the bankruptcy will be published in the London Gazette as well as the Insolvency Register, both of which are accessible by the public. Certain professions will also not allow bankruptcy, so it could have implications on an individual’s current job, as well as future job prospects. Finally, not all debt can be written off by bankruptcy, e.g. student loans.

Criteria and cost

In order to declare bankruptcy, there are a few criteria that must be met. The individual must be a resident of the UK (or have a UK passport and a UK postal address). The majority of debt owed must have been taken whilst living in the UK. The individual must be insolvent (ie the total value of the debt outweighs the value of the individuals assets). The individual must be able to afford the associated costs. The actual cost to declare bankruptcy is over £700 made up of a court fee, and administration fees.


In order to declare bankruptcy, application must be made in person to the individual’s local county court. Once the fees have been paid, then a private meeting is held with the district judge who will assess if bankruptcy is eligible and the best course of action. If so, bankruptcy could be declared the same day. A meeting will then be required with the Official Receiver, who will assess the length of the bankruptcy, if any monthly payments are required and if there are any significant assets that need to be sold.