If you’ve been bankrupt in the past, probably the last thing you’ll want is to go there again. But even if you’ve made a real effort to improve how you manage your finances, things can still sometimes go wrong.
You certainly won’t be alone if you find yourself declaring bankruptcy again, as even well-known celebrities have been known to file for bankruptcy two or more times. However, there are a few important points to consider before going ahead.
Is bankruptcy really your only option?
Just because it was the best (or only) choice last time you got into debt, bankruptcy may not be the right route to take now. Ask the qualified debt counselors at Bankruptcy Clinic for advice before you proceed, as depending on your circumstances, there could be other ways to tackle your debts.
These might include another form of personal insolvency, such as an IVA or Debt Relief Order. Or you may be able to consider a Debt Management Plan, in which case you could avoid formal insolvency proceedings altogether.
When was your first bankruptcy discharged?
You can declare yourself bankrupt again at any time after your first bankruptcy has been discharged. However, if this is less than six years ago, you could find yourself subject to a Bankruptcy Restrictions Order (BRO). This is because the court doesn’t tend to look favourably on people who haven’t ‘learned’ from the experience of their first bankruptcy.
Of course, your second bankruptcy could be due to circumstances entirely beyond your control (such as job loss or splitting up from a partner) rather than financial mismanagement. In such cases, the court may decide not impose a BRO – but this is entirely at its discretion.
If you do end up with a BRO, this means that the restrictions placed on you through your Bankruptcy Order will remain in place for up to 15 years. The Bankruptcy Order itself would still normally be discharged after 12 months.
Has your job changed since your first bankruptcy?
As you may recall from your first bankruptcy, certain professions are banned from becoming bankrupt and going ahead could put an end to your career. In other situations, your employer will need to know about your bankruptcy, which could also affect your current or future job prospects.
So, if you’ve moved into any of the following types of role since your first bankruptcy, you should try to avoid going bankrupt again if possible:
- Police officer
- Armed forces
- Legal or accountancy roles
- Local authority member or MP
- Senior manager
- Company director
- Banking or financial services roles.
Can you afford to become bankrupt again?
If you can’t raise the necessary fees to declare yourself bankrupt, it won’t be an option for dealing with your debts. Like your first bankruptcy, you’ll need to pay fees to the court and the Official Receiver which currently total £700. If you ask Bankruptcy Clinic to help with your petition, you’ll need to factor in our fees, too.
Depending on your circumstances, you may be able to consider a Debt Relief Order (DRO) instead of bankruptcy if you can’t afford the fees. Applying for a DRO costs just £90, but there are some strict criteria that you’ll need to meet in order to qualify.
Will the process be different for a second bankruptcy?
Apart from the possibility of a BRO being imposed (see above), you’ll notice some differences in the process if you go ahead with a second or subsequent bankruptcy. The court and Official Receiver will probably delve deeper into your personal affairs to identify the root cause of the bankruptcy and assess if the situation could have been avoided.
They’ll also consider whether bankruptcy really is your best or only option, although your Bankruptcy Clinic adviser will be able to provide the supporting information for this aspect. And you’ll almost certainly have to attend a face to face interview with the Official Receiver, whereas you may have been allowed to do this by phone for your first bankruptcy.
What will happen to your credit rating?
You probably don’t need us to tell you that a second bankruptcy won’t do your credit rating any favours. Like your first one, it will stay on your credit file for at least six years after the date of your discharge. And if a BRO is imposed, it could show up for even longer and you could be barred from applying for future credit whilst the BRO remains in place.
Having said that, any form of debt management will show up on your credit file at some point and remain there for quite some time. So don’t let this factor put you off going bankrupt if it’s the best way of dealing with your debts. At the very least, you can prove to any future potential creditors that you did something about your money problems rather than burying your head in the sand.
Find out more
Bankruptcy Clinic are here to answer all your questions about second bankruptcies, other forms of personal insolvency and any other aspects of debt management. Get in touch today and we’ll help you find the right way to overcome your debts.
- Call 0808 168 7389 or 01625 462 770
- Email us at firstname.lastname@example.org
- Complete our simple online form.