Find the answers to frequently asked questions about bankruptcy
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Bankruptcy is a legal process that could write off any unsecured debts that you can't afford. It is worth getting bankruptcy advice if you are considering getting out of debt this way, or if your lenders are trying to make you bankrupt, because there are a number of consequences.
For example, if you can afford to do so you may be expected to make payments towards your debts for up to three years, and your home could be sold if you are a homeowner. Bankruptcy can also affect your ability to borrow money for up to six years in the future, although further restrictions on obtaining credit may apply after that time.
You must attend a County Court where your case will be assessed. Once your bankruptcy is agreed, you hand over all rights to your assets to a Trustee. Bankruptcy ends when you are discharged, which is usually after one year.
The process of bankruptcy in Scotland is sometimes known as 'sequestration'. Sequestration and bankruptcy are basically the same thing, although the rules for bankruptcy in Scotland differ in some ways to the rest of the UK.
For example, in Scotland you must have at least £1,500 or more of unsecured debt before you can be made bankrupt. In England you can be made bankrupt with only £750 of unsecured debt that you cannot repay.
In Scotland there's a £100 fee to go bankrupt, which is paid to the Accountant in Bankruptcy (AiB). In the rest of the UK it can cost up to £700 to go bankrupt, of which £175 is a court fee. In certain circumstances you may not have to pay this court fee (e.g. if you are on a very low income).
At Debt Advice Now, we are completely transparent about the fees we charge for bankruptcy. Our fee is £375 plus VAT per application. This fee includes all of the necessary administration to process a bankruptcy application, the preparation of the court documents you will need and the communications with your lenders. You will also receive ongoing support from a Personal Insolvency Specialist in the period running up to your bankruptcy and the 12 months following your Order. These fees can be paid in installments.
You would be expected to tell the 'official receiver' (who helps to oversee your bankruptcy) about all of your assets and provide any financial documents that they need, such as bank statements. During the bankruptcy you would be expected to tell the Trustee (who also oversees your bankruptcy) about any changes to your financial situation - for example, if you inherited property or if you received any significant cash payments.
You would only be able to borrow more money (limited to £500) under certain circumstances.
You can find out more about what to expect during bankruptcy when you speak to a debt adviser or Insolvency Practitioner.