Young Wrexham

Bankruptcy

Bankruptcy is one way of solving a serious debt problem. It is a court order that you can apply for so that you don't have to deal with the people you owe money to (your creditors). The court appoints an Official Receiver to take control of your money and assets and deals with the creditors.

Choosing to go bankrupt is a big decision and should not be taken lightly. It may or may not be the best option for you so get advice first. Someone you owe money to could also make you bankrupt.

The advantages of going bankrupt are:

• You don't have to personally deal with creditors
• You can keep some household goods and a reasonable amount to live on
• Once the bankruptcy order is over (usually one year) you can start afresh
• The money you owe can usually be written off

The disadvantages of bankruptcy are:

• It costs £460 to go bankrupt
• You can't apply for credit while bankrupt
• Your home and luxury possessions, including your car, might have to be sold
• You might lose your job as some professions do not let people who have been made bankrupt continue to work
• If you have your own business, it might have to be sold
• Your case will not be private and may even appear in your local newspaper
• Bankruptcy does not write-off all debts. You may still be responsible for student loans or court fines for example
• It will affect your credit rating and future credit checks (See the Credit Check information page)

Going bankrupt

• If you have taken expert advice and decided bankruptcy is your best option, you need to apply at your local court
• Remember to bring your bankruptcy fee, which you will not have returned
• Get a bankruptcy petition (form 6.27) and a statement of affairs form (form 6.27) from your local court or the Gov.UK website and apply, detailing all your creditors
• At your hearing, if you are declared bankrupt, your bank accounts will be frozen and someone else will take control of your money
• Your money and assets will then be sold to pay off your creditors
• After a year, the bankruptcy will normally be over and any outstanding debts will be written off

Before making any decision about bankruptcy, talk to the expert advisers at the Citizens Advice Bureau confidentially and for free to find out about all your options