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Bankruptcy Support & Advice

Bankruptcy is often a last-ditch effort for those faced with the harsh reality of unmanageable debt, but it can be a powerful means to wipe the slate clean and start fresh financially.

What is Bankruptcy?

Bankruptcy can offer a fresh start for those seriously struggling with debt. This legal process will erase your debts in full and restore financial control, however the consequences of bankruptcy must not be underestimated – it could affect you financially up to 6 years after Bankruptcy is petitioned. 

Facing financial difficulty is a tough situation to be in, but Bankruptcy can provide much needed relief. If debts are spiralling out of control and no end seems near, then filing for bankruptcy could help you take the first steps towards a brighter future.

Bankruptcy is an option if you are unable to repay your creditors over £5,000. You can apply for it directly on the government website, or creditors may initiate legal proceedings and file a Bankruptcy Petition against you if payments remain unpaid.

How long does Bankruptcy last?

Declaring bankruptcy may seem daunting, but its effects don’t last forever. Typically, it takes about a year for this process to be complete – though depending on the situation, that length can vary. After your period of insolvency ends however, most remaining debt is wiped away with you left holding only a six-year record in your credit history as evidence of the event.

Advantages and Disadvantages of Bankruptcy

There are several key points that should be taken into account before making the decision. Be sure to do your research properly in order to fully understand what this option entails so you can make an informed choice.

Advantages

Disadvantages

What is the actual cost of bankruptcy?

The fees in Bankruptcy are as follows.

The total cost is £680 which is split in to two.

  • £130 – adjudicator fee
  • £550 deposit (fully refunded if the petition is rejected)

The bankruptcy fee must be paid in full before you can petition for bankruptcy. You can pay in full or pay in instalments via the government site.

You will not be required to make any further payments towards the debts involved in your bankruptcy, however, you must keep up repayments that aren’t included to avoid further issues.

Bankruptcy vs. Other Solutions

Bankruptcy Vs. IVA

Both options are forms of insolvency and allow you to write a huge percentage of the debt off:

  • An IVA still requires you to pay an affordable amount towards a proportion of your debts typically for 5 years (60 Months).
  • Your assets are legally protected with an IVA, such as your property or car, but in Bankruptcy your assets could be at risk.

     

Bankruptcy Vs. Debt Management Plan

There are huge differences between these two solutions, and the main ones are as follows:

  • Bankruptcy is a legal formality that brings an end to debt obligations, whereas a debt management plan offers creditors and borrowers the opportunity for agreement outside of court proceedings.
  • Bankruptcy can offer comprehensive debt relief, including most bills. Alternatively, a debt management plan only covers non-priority debts.

     

  • When struggling financially, bankruptcy and debt management plans offer important solutions. Bankruptcy provides a way to start anew when repaying bills is no longer feasible; debt management plans provide an alternative by allowing you to reorganise your debts with monthly contributions over time.

     

  •  If you are considering declaring bankruptcy, attendance at a court hearing is no longer mandatory. An online application must be submitted instead, and an administrator will review it before any decisions can be made.

     

Bankruptcy Vs. Debt Relief Order

There are huge differences between these two solutions, and the main ones are as follows:

  • Debt Relief Orders present a viable option for those who have limited income and no property. It provides individuals with an alternative to the traditional bankruptcy process, allowing them to overcome debt insecurity and start fresh in their financial journey.

     

  • With Bankruptcy, the financial relief you seek may come with a significantly steeper price tag – £680 compared to only £90 for a debt relief order. Choose wisely when considering debt solutions and assess which option provides the most appropriate path forward!
     
  • Bankruptcy offers an unlimited debt relief solution for those with a large amount of debt, while Debt Relief Orders are available to individuals who have debts not exceeding £30,000.

Is Bankruptcy right for me?

When it comes to debt solutions, due diligence is key! Taking the time to evaluate all potential options and consulting with professionals can ensure that you make an informed decision. Don’t settle for anything less than what’s best suited specifically for your situation.

Bankruptcy can be an attractive option for wrestling out of debt, yet the consequences may outweigh any benefits. Before you go down this path, it’s essential to understand what risks accompany such a decision.

Why choose Advice Debt?

We can help you, today.

We all know how difficult it can be to manage our finances when we’re juggling debt and an ever-changing financial situation. That’s why we are here for you today offering expert advice that will put your mind at ease! We’ll work with what matters most, getting out from under the load of persistent debts so they don’t continue weighing down on every aspect of life.

Advice Debt Top Tips

Do I really need to buy this?
Avoiding debt can be a challenge in our modern world, where it's easy to get overwhelmed by all the temptations of spending. To stay on track with your finances, take some extra time before big purchases and ask yourself if you truly need that item.
Make budgeting a good habit
Mapping out and keeping track of your spending is essential for financial stability and success. Developing a budget can help you save money, recognize potential overspending habits before they start, as well as protect against unexpected expenses. Mastering the practice of creating an effective budget plan will go long way in helping to improve your overall credit rating.
Knowing your credit score
An excellent credit score is essential for any individual looking to access financial assistance. Without this metric, lenders may deny borrowers mortgages, car loans and other financing options; even something as simple as a phone contract could come at an immense price with the wrong rating. Therefore, it's important that you understand how your credit score can impact your life in various ways - from getting approved for major purchases to making sure you are paying reasonable costs on everyday transactions.
Borrow or save?
Deciding whether to save or borrow can be a difficult choice that carries lasting consequences. Saving may mean having less cash on hand in the present, but potentially avoids financial trouble down the road. Conversely, borrowing provides quick access to funds now; however if payments are not made in full and on time it could create prolonged problems with debt repayment. Ultimately, saving is often considered the safer option for making major purchases.
Have I checked the interest rates?
Before taking the plunge and borrowing money, take a look at that all-important APR. Keep in mind interest rates can vary dramatically - so make sure you research what sort of additional cost is involved with taking out your loan to ensure it fits within your budget!
Switching your credit card
Take advantage of low-interest credit cards to save yourself some money! Doing the research, you may even find a card with 0% APR - however this won't last forever. Make sure that if you switch providers and get one at zero percent interest, make it your priority to pay off debt during that period or else once it ends, interest rates will be added in full force.
Saving for a rainy day
Don't let debt be a factor in your future plans. A smart money move is to start putting away just a little bit each week - every penny counts! For example, squirreling £5 per week adds up over time; by the end of one year you'll have saved an impressive total of £260 (and if placed into savings that could grow even more!).
Don’t bury your head in the sand
Don't let your dilemma fester. If you find yourself in trouble, seek out professional advice to get back on the road to financial freedom. Advice debt services are well-equipped with experts who specialise in helping people resolve issues quickly and discreetly – so don’t hesitate to reach out for guidance!

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Is Bankruptcy right for you?

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*To find out more about managing your money and getting free advice, visit Money Helper, an independent service set up to help people manage their money.

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