Bankruptcy FAQ (also known as
Sequestration in Scotland)
APPLY
Is Bankruptcy right for me?
Bankruptcy is a legal route for people with serious debts they cannot pay. It's often a last resort solution for those who can't offer their creditors an acceptable alternative. So if you have no funds to propose a repayment arrangement with your creditors, bankruptcy may be your best option. However, if you can afford to make monthly payments, an
Individual Voluntary Arrangement (IVA) or Trust Deed for residents of Scotland might be a better alternative. To find out more, see the
IVA and
Trust Deed sections,
contact us, or
apply for assistance with your bankruptcy today.
What are the advantages of bankruptcy?
In bankruptcy, almost everything you own, including your home, becomes available to a trustee. The trustee will then use your assets to pay off your debts. So once the bankruptcy period finishes, all your debts are written off, and depending on your circumstances, you could be debt-free any time between one and fifteen years. If you live in rented accommodation and you're up-to-date with your payments, you can also continue paying rent.
What are the disadvantages of bankruptcy?
Your trustee will sell all your assets, except those required for a basic standard of living. This may also include your home.
You can't obtain £500 or more in credit unless you first disclose you are bankrupt.
You must pay any income above the money you require for basic living expenses to your creditors.
Your job may be at risk. Certain professions do not allow you to work when bankrupt, for example, acting as a company director or holding public office.
The bankruptcy will give you a bad credit rating, potentially for many years after your bankruptcy ceases.
Your bank and credit card accounts may be closed.
Your bankruptcy will be publicised in the newspapers.
What will happen to my home?
When you're made bankrupt, all your assets, including your home, come under the control of the trustee. It is the trustee's duty to make as much money as possible from your assets to pay back your creditors. Which means they may sell your home to pay off your debts.
Who can make me bankrupt?
You can choose to become bankrupt if it suits your financial circumstances. If you wish to do this
contact our partner
to guide you through the process. The following parties can also present a bankruptcy order to the court:
one or more creditors to whom you owe at least £750
the insolvency practitioner of an IVA (Individual Voluntary Arrangement), if they believe they have grounds to proceed with a bankruptcy order.
What happens if a bankruptcy order is made against me?
Within 21 days, you must provide the Official Receiver with any information they require regarding your financial affairs, including a list of assets and details of your debts. Sometimes, you may also need to attend the
What are my duties in bankruptcy?
Throughout, it's your legal duty to cooperate fully with the Official Receiver, providing honest information on your assets and liabilities. If your financial circumstances change before your bankruptcy starts, you must also inform the Official Receiver immediately.
Can I challenge a bankruptcy order?
Yes, you can annul (cancel) a bankruptcy through the courts if:
you can prove the bankruptcy order shouldn't have been made
your creditors agree to an IVA (Individual Voluntary Arrangement)
the court is satisfied that you will pay all your bankruptcy debts, including any incurred fees and expenses
APPLY
If after reading this FAQ and
the IVA FAQ you feel an IVA might suit you
better then please complete the short online
form and we'll get back to you to discuss it
further.
