Bankruptcy Clinic has helped thousands of people over the years who are looking at Bankruptcy as a debt solution. As our name suggests, we’re bankruptcy specialists, but if bankruptcy isn’t your best option, we can still help by offering an alternative debt management solution that meets your needs.
In this article, we’ve set out a simple checklist to help you decide whether or not bankruptcy might be right for you. Please note that these are just some of the things you’ll need to consider carefully before making a decision around how to manage your finances.
- What’s your financial situation?
If your debts are worth more than your assets, and you have little or no disposable income with which to repay your creditors, bankruptcy could be an option. However, if you can afford to pay something off them each month, a Debt Management Plan, Individual Voluntary Arrangement or Protected Trust Deed might be a better choice.
- How much do you owe?
To declare bankruptcy, you must owe at least £750 in unsecured debts. In reality, this figure is normally much higher, so if the amount you owe is relatively small, you may have other options open to you. For example, if you owe less than £15,000, have little or no disposable income and you’re not a homeowner, you might quality for a Debt Relief Order.
- What type of debts do you owe?
Bankruptcy is designed to help you deal with unsecured debts such as credit cards, store cards, personal loans, payday loans and bank overdrafts. It can’t be used to clear secured debts, student loans, court fines, child maintenance arrears and benefits overpayments. So if the bulk of your debts aren’t covered by bankruptcy, it probably isn’t the right answer.
- Might things improve soon?
Bankruptcy may not be suitable if your finances are likely to improve soon. For example, if you’re about to start a new job with a higher salary, or you’re expecting a windfall such as an inheritance or proceeds from a financial mis-selling claim. In such cases, your adviser might suggest that you choose a different solution and start repaying your debts if you can.
- Are you a homeowner?
If you own your property or any other valuable assets, it’s important to note that these could be sold for the benefit of your creditors after your Bankruptcy Order has been made. However, there may be a way that you can stay in your home, such as getting your partner, a relative or friend to buy out your interest in the property. It’s essential to take advice on this issue before going ahead with your bankruptcy, so that you’ll know what to expect.
- What’s the nature of your employment?
There are some professions where you could lose your job, or be refused certain roles, if you’re made bankrupt. These include solicitor, estate agent, insolvency practitioner, publican and stockbroker. If you’re self-employed, your business will normally be closed down and your staff dismissed. These are obviously very serious considerations if you’re in one of these employment situations.
- Can you afford the fees?
It costs around £700 to declare yourself bankrupt in England or Wales – and you’ll need to pay this money to the court upfront. If you ask Bankruptcy Clinic to assist you with your Bankruptcy Petition, you’ll need to take our fees into account, too. So if you’re not in a position to make these payments, you’ll need to find a different way to manage your debts.
- How important is obtaining credit in the future?
There’s no getting away from the fact that bankruptcy will have a long term, adverse effect on your credit rating, and you could find it harder and more expensive to get credit or a mortgage in the future. If getting credit in the future is very important to you, for example if you want to buy a property or set up a business, you might want to explore other alternatives to bankruptcy.
It’s time to seek expert advice
Hopefully you’ve found our checklist helpful and you now have a better idea of whether or not bankruptcy might be a suitable way of dealing with your debts. Your next move is to contact the debt advice team at Bankruptcy Clinic, who’ll offer specialist help that’s tailored to your individual circumstances.
Contact Bankruptcy Clinic today
- Call free on 0800 168 7389 from a landline
- Call 01625 462 770 from a mobile
- Take our online bankruptcy test (an adviser will call you back)