Filing for bankruptcy is one way of finding debt relief but a court will expect you to have explored all other options before accepting your application. The bankruptcy process may seem daunting but there are free services that help with this, so there is no need to incur more debt by paying a commercial service. Residents of Scotland and Wales need to follow the relevant regional legal process.
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- Moderately Challenging
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Things you need
- Debtors bankruptcy petition Form 6.27 (England and Wales)
- Statement of affairs form 6.28 (England and Wales)
- £700 for filing fees (England and Wales)
- Contact details of your creditor/s
- An up-to-date debt statement from your creditor/s
- Personal details: home addresses, employer
- £200 filing fee (Scotland)
- Forms 6.30 and 6.31 plus £640 filing fee (Northern Ireland)
Get bankruptcy forms 6.27 and 6.28. You can collect them in person from your local county court or ask them to post them to you. You can also download them online at the free bankruptcy advice service Debtwizard.com. You'll also find advice at Debtwizard.com on filling in the forms, including the level of personal information required to support your application. Michael Thomas, debt counselling guru, points out that it isn't enough to cite the recession as a cause; you must explain the sequence of events leading to your need to petition the court and the steps you've taken to avoid bankruptcy. Thomas also suggests you check the registers for County Court Judgments in case there are any you aren't aware of.
Gather the £700 bankruptcy fee. The Official Receiver's fee of £525 goes to the Insolvency Service and £175 is the court fee. If you are on benefits, ask about a reduced court fee. Payment may be in cash or a bank, charity or solicitor's cheque. Credit cards and personal cheques aren't accepted. If you have problems finding the fee, Debtwizard suggests you sell something, ask your family for help. Speak to your trade union or professional organisation if you have one to see if they can assist. You can stop paying your creditors providing you can prove to the court that you used the money for the bankruptcy fee.
Find the right court to take your petition to. In general, debts under £100,000 are handled at a County court, whereas you may need to attend the High Court for larger amounts. Call your nearest County court for confirmation of the right court. Some courts allow you to drop-in and present your petition, while others require an appointment. When you present your documents the judge will look at them while you wait in a quiet room. You may not have to see the judge and it's possible you'll simply receive a bankruptcy order number and a date and time for you to call the Official Receiver's office to discuss your forms. This call usually lasts about 45 minutes. Based on this talk, the Official Receiver then makes an Income Payment Agreement for you to follow.
Check online with the Debt Advisory Centre Scotland about whether you qualify to apply for bankruptcy and for advice on alternatives to it for Scottish residents. There are two routes to bankruptcy in Scotland and one in Northern Ireland.
Select the route that is right for you if filing for bankruptcy in Scotland. With route one you must have unsecured debts of at least £1,500 before you can apply. The second route is called Low Income Low Asset: to qualify for this you must earn less than the minimum wage and have assets worth less than £10,000 in total. The filing fee is £200, but if you are using the low income route, you may be able to get that reduced.
Contact the Insolvency Service or one of the debt counselling services for free advice if you live in Northern Ireland. The filing fees are £640 and to qualify you must have an unsecured debt of at least £750. The process is the same as that in England and Wales.
Bankruptcy in Scotland and Northern Ireland
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- The Guardian: Filing for bankruptcy: a step-by-step guide
- Citizens Advice Bureau: Bankruptcy
- Department of Enterprise Trade and Investment Northern Ireland: Guide to bankruptcy
- Debt Advisory Centre Scotland: Filing for bankruptcy in Scotland
- Debtwizard: Free bankruptcy support
- NI Direct: What happens when you become bankrupt?