Bankruptcy is not the end of the world although it still carries a stigma.
In some ways it is better than the IVA option where someone else controls your finances.
It is important to note at this point that declaring yourself bankrupt is not something that you should do lightly, and you should seek qualified advice.
If you own your home jointly there may be steps that you can take to sell your share of your home to your partner/another family member which would remove the risk of it being sold. You must tale specialist advice on this.
You need a form from your local court which you need to present when you declare bankruptcy.
You should also check at this point what the current fees are for declaring yourself bankrupt. This form will need to be filled in before you petition for bankruptcy.
Before visiting the court you need to be aware that any bank accounts you have an interest in will be frozen. You therefore need to make sure that you have enough cash to provide for your basic needs until you are next paid.
You would normally make an appointment at the court to declare yourself bankrupt. In actual fact if you turn up with the correct forms and the payment without an appointment during normal court hours you have to be seen, but normal practice is to make an appointment. The court appearance will normally be a formality, and you will then be free of your unsecured debt immediately.
All of this detail needs to be discussed with a qualified adviser, but it is worth pointing out one key fact. If you are part of a couple, then the insolvency rules do not apply to your partner, i.e. they cannot insist that your partner pays anything towards mortgage/rent or utility bills etc.
This is very important since if you fill in the forms showing that you pay half of the mortgage/rent this may result in you having a monthly excess. If so, you will be ordered to pay some of this money to your creditors for up to 3 years after your bankruptcy is discharged. If you don’t have any excess then you will be relieved of any responsibility for paying your creditors when you are discharged.
The insolvency service will want to know if you have any assets that can be sold. They will only be interested in high value items such as your home, cars, boats etc. Current practice in the UK is that bankrupt’s homes are very rarely visited to assess whether there are any personal items that can be sold. The time and effort is simply not worth the small amounts of money that would be re-couped.
Your car may be at risk of being sold unless you can prove that you NEED it for work (i.e. you cannot travel to work by public transport).
Once your bankruptcy is discharged you will be free to start re-building your debt free life.
You will probably find it almost impossible to get unsecured credit for a number of years. Mortgages are more available, but the rates will be higher. It pays to shop around, because the rates on adverse credit loans can vary widely.
