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If your debts are overwhelming you and you do not see a way out, then applying for bankruptcy might be a way to restore some control to a situation that may be threatening to spiral out of control. While you can apply to make yourself bankrupt, one of your creditors can also make the same application about you if you owe at least £5,000. Bankruptcy is often the most straightforward solution to a serious debt problem but it may not be the only one. Other options may be more appropriate for your circumstances. In this article, we look at the pros and cons of applying for bankruptcy without a lawyer and what those alternatives might be.
While you’ll find plenty of firms advertising bankruptcy services online, you can actually go through this process without outside help. You’ll need to apply at www.gov.uk/apply-for-bankruptcy and fill in a form about your debts, your income, your assets and those of your immediate family.
The application process costs £680 but this money is not refunded once the order is in force. While this may seem like a lot of money, if you apply online, you may be able to pay in instalments.
You can contact your local Citizens Advice Bureau which will be able to help you negotiate and application for a bankruptcy order. Alternatively, you can call the Insolvency Service enquiry line on 0300 678 0015.
Before you make your bankruptcy order application, you’ll need to ensure that you have enough money for day-to-day expenditure. Once an order is in force, your bank accounts will be frozen and will come under the control of the Official Receiver.
Make sure that you take out enough money to live on for the first few weeks after you submit the application.
After you’ve made the application, an adjudicator has up to 28 days to make a decision. The adjudicator may need more information – in this case he or she will contact you and will then have a further 14 days to make their decision.
When an application is granted, your accounts will be frozen and your assets will come under the control of the Official Receiver. You will have an interview with the receiver to discuss what is expected of you and how your assets are going to be divided up to pay back some or all of your creditors.
If your application is rejected, you can ask the adjudicator to review the decision. If this fails, you have an option to appeal to the court.
Administration orders – these are issued by a county court and allow you to make a single payment to the court every month towards your debts. You have to have at least two debts and their total value to be less than £5,000 to qualify.
Individual voluntary arrangements (IVAs) – An IVA is a legally-enforced agreement between you and your creditors that gives you a set repayment to all of your debts to make each month.
Debt Relief Orders – if you have few asset, are not a homeowner, have little income and your unsecured debts are less than £20,000, you may be able to apply for one of these which will protect you from creditors chasing you directly.
Oliver Jones has written for Solution Loans since 2015. His passion for personal finance comes through in the 150+ blog posts he's written since that time. His talent for explaining all things money means he's covered topics as diverse as...Read about Oliver Jones
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