Bankruptcy is a way of dealing with debts that you cannot pay. Whilst you are bankrupt any assets that you have might be used to pay off your debts. After a period of time (usually one year) your outstanding debts will be written off and you can make a fresh start.
The effects of going bankrupt are the same whether you file your own petition or are made bankrupt by your creditors. Bankruptcy should always be considered as a last resort, when all other avenues have been explored.
If you wish to make yourself bankrupt, you can obtain a form from your local county court offices. It costs £310 deposit plus £150 as a court fee, payable in cash when you submit your form to the court. Only the larger county courts deal with bankruptcy petitions so you may not be able to take your petition to your local court. There will be a hearing in front of the district judge, who decides whether it is appropriate to make the order.
If the order is made you will then have an appointment to see the Official Receiver who deals with your bankruptcy, sometimes this will take place over the telephone. They will go through a financial questionnaire with you including details such as your National Insurance number, pension policy details, income, outgoings and assets.
A creditor can make you bankrupt if you owe £750 or more to that creditor and you have not been able to agree how to repay the debt. Creditors can also club together to make you bankrupt. You can also be made bankrupt if your Individual Voluntary Arrangement (IVA) fails.
For further information visit Bankruptcy.
Debt Consolidation Explained contains general information only. We strongly advise you to seek qualified professional advice before taking any action.