What You Need To Know About Bankruptcy

If you're struggling with debts contact Debt Free Direct on 0800 298 8836.

If you are in serious debt, bankruptcy protects you from the people you owe money to and allows you to start afresh. However, bankruptcy is a serious matter with significant consequences and should only be considered as a last resort.

In bankruptcy a Trustee is appointed by the court to take control of any assets you have which the Trustee considers to be non essential. These assets will then be sold off and the money raised is used to pay the people you owe money to.

You will be entitled to keep your reasonable household effects and a modest vehicle if you can show the need. Examples of non essential assets which the Trustee may sell include expensive jewellery, expensive cars, shares and investments. If there is equity in your home it is highly likely that this will be realised. Unless you can raise money from, for example, family or friends it is likely to be sold.

Bankruptcy also imposes restrictions including removal of credit facilities, freezing of bank accounts and for certain professions you could run the risk of censure and, in some cases, lose your job.

On credit applications, lenders often ask for details of any previous bankruptcies, therefore after your period of bankruptcy ends you will also find it difficult to get credit or a mortgage. Some employers also take credit checks which may harm future employment prospects.

Depending on your circumstances, the current cost of going bankrupt is £600. The deposit of £450 towards the costs of administering your bankruptcy is payable in all cases, however the court fee of £150 may be waived by the court if for example you are on Income Support.

If you are a married couple and you are both applying for bankruptcy, you will each have to pay separate fees.

An IVA, Debt Management Plan, re-mortgage and consolidation loan are all alternative debt solutions and should be explored before entering into bankruptcy.

View Debt Free Direct's 'Alternatives to Bankruptcy' video to learn more, http://www.youtube.com/watch?v=GKm0nFedNbw

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