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What you need to know about declaring bankruptcy
Only once you have completely looked at all other options should you consider declaring yourself bankrupt. The first thing you must do to declare bankruptcy in the UK is contact your local County Court responsible for bankruptcies. When you do this, you will be required to pay a court fee and deposit towards the administration of your bankruptcy. Whilst the fee, which currently stands at around £140, can sometimes be waived, the deposit which is approximately £310 cannot be avoided. The following information is designed to show you how to declare yourself bankrupt and what details you will be required to provide.
What Details do I need to Submit when Declaring Myself Bankrupt?
In order to declare bankruptcy, you will be required to complete a document known as Form 6.28. This form is very detailed and requires you give substantial information regarding your current finances and debts. Whilst guidance notes are provided with the form, it is always recommended that you seek assistance when doing so. The information you must provide will include the following:
- Mortgage details
- All information related to any secured loans you have
- The value of any properties you own
- All creditors to whom you owe money
- All information related to any unsecured loans you have, including joint debts
Is Bankruptcy my best option?
Bankruptcy is the best route for many with extreme debt, however it isn’t the only option. Depending on your level of debt, your future financial outlook and other factors such as your profession, and your assets, there may be other better options. These options include debt consolidation, Individual Voluntary Arrangements (IVAs) and Debt Relief Orders (DROs). Complete our quick online assessment to see which is best for you.Take our quick online test
Important Things to Remember
Any money you have in bank and building society accounts that you need to live on should be withdrawn from your accounts BEFORE you take your bankruptcy petition to court. This is because your accounts will be frozen once your bankruptcy petition has been taken to court. When calculating the value of your assets, you must adhere to the following guidelines:
- You must ensure you do not falsely rise the value of any vehicles you own
- When calculating the value of furniture and other belongings, you must set their value at what they would sell at auction; not how much they were worth when new or the cost to replace them
- Remember – all such assets that you list here are open to be sold to help repay your debts
Making a Repayment Offer
If you have a regular income, you can make a repayment offer to your creditors. However, if you do not have an income, you will not be expected to make such an offer, this includes people who are on benefits or have a low income. When making this offer, you should only include regular income, as well as any contributions you receive from family members living with you. When making a repayment offer, you will not be expected to live on nothing and those in charge of your bankruptcy will usually strive to help you in terms of the essential expenditure they will allow. It must be noted that repayment offers of less than £200 per month are of little benefit to creditors because administration costs can be more than this.
What Happens Next?
Once you have completed the form and submitted all the information required, the court will then use this information to decide whether to approve your request for bankruptcy or suggest another option, such as an IVA. This decision will depend on various factors, such as how much you owe and how much your assets are worth.
There are four outcomes that can be arrived at:
- Your petition is dismissed – This is likely if your assets exceed the amount you owe
- Your petition is adjourned – This will happen if your debts are not legally enforceable
- Your petition is stayed – This will happen if it is felt an alternative method is more appropriate
- Your bankruptcy is approved