Bankruptcy (BKY)

What is Bankruptcy?

Bankruptcy is a formal insolvency solution that means your outstanding debts are written off. It is available to people living in England, Wales and Northern Ireland.

Bankruptcy is typically viewed as a last resort. It’s a legally binding solution and is intended for those who can’t repay their debts using income or assets in a reasonable period of time.

Is Bankruptcy right for me?

Declaring bankruptcy will involve the selling of any assets (including your home, cars, caravans, etc.), and abiding by certain restrictions during and after the application. Your details will also appear on a public Insolvency Register.

How do I declare Bankruptcy?

To declare bankruptcy, you will need to apply through the Insolvency Register in England and Wales, or through the High Court in Northern Ireland. Applying for bankruptcy will require an initial fee of £680. You can pay this in instalments, but you’ll need to have paid the full amount before you submit your application.

A decision on your application for bankruptcy will return within 28 days. Once declared bankrupt, all assets of high value will be sold off. These include your home, cars and all assets which will go towards paying back your outstanding debts. If you have spare income after covering reasonable living costs, you may also be asked to pay a monthly amount under an Income Payment Agreement (IPA).

Bankruptcy pros & cons

Bankruptcy Pros

✅ Writes off all unsecured debt

✅ Stops creditors from taking legal action

✅ Affordable monthly payments
Bankruptcy Cons

❌ Your possesions such as car or property, may be repossessed

❌ There is a £680 application fee

❌ Your Bankruptcy will be placed on a public record

❌ Your credit rating will be affected for 6 years

Applying for Bankruptcy

If you want to apply for Bankruptcy or find out what other solutions could be available, get in touch and one of our friendly advisors will:

1. Review your current debts and financial situation, then give you all the information to make the right choice for you.
2. If you decide Bankruptcy is the best option for you, Mums with Debt will help you with the setup process.
3. Once set up, we will review your application and send the Bankruptcy request to your creditors.

What debts can’t be included in Bankruptcy?

Though bankruptcy typically includes most unsecured debts, there are some exceptions that will not be written off when you are declared bankrupt, such as:

• Student loans
• Social fund loan
• Debts taken out fraudulently
• TV license arrears
• Magistrate court fines
• Debts taken out after you declared bankruptcy
• Child maintenance arrears

Living with Bankruptcy

Following your initial filing for bankruptcy, your personal situation will change significantly when you receive a bankruptcy order. An official receiver will take control of your possessions and any that are considered valuable assets may be repossessed.

If you have spare income each month (after covering reasonable living costs), you will likely be asked to make monthly repayments towards your debts based on what you can afford.

As your credit score will be negatively affected, getting future loans, mortgages or tenancies may become more difficult. Bankruptcy will remain on your credit file for 6 years, after which you can begin rebuilding your score.

Bankruptcy typically lasts for a year, Once you reach the end of your bankruptcy agreement your debts are written off, allowing you to make a fresh start.