Bankruptcy information and advice - please view the topics below

> What is bankruptcy?

Bankruptcy is a way of dealing with unmanageable debt once and for all. On the day you go bankrupt all your debts are taken away from you and you are no longer responsible for repaying them. Also, your creditors are legally prevented from contacting you again. Bankruptcy has four basic elements:

1. Seizure of assets

When you go bankrupt your house is seized if there's money in it. Also your car would be taken if it's worth more than £1500, and if you have particularly valuable possessions, such as jewels or luxury electronic equipment, this may be at risk. Regular goods such as televisions, fridges, and so on, are safe. For more information visit the links below or contact us.

2. Bankruptcy Order

This is your actual bankruptcy. It usually lasts for 12 months. During this period you are subject to bankruptcy restrictions. After 12 months you are released, or discharged, from these restrictions.

3. Income Payment Order

This is a monthly payment plan which you make to the court. It usually lasts 3 years. The payments will always be affordable, since you are only asked to make payments if you can afford it. Sometimes you are not asked to make payments at all. Monthly payments in bankruptcy are usually lower than payments in an IVA.

4. Damage to credit rating

This lasts for six years. After that it goes back to normal and you can borrow again at normal rates.

> Usually 36 monthly payments

-Payments worked out according to your budget, designed to be affordable

-Payments may be raised or lowered if your circumstances change

-After 36 months, anything outstanding is written off

> Bankruptcy usually lasts for one year

-During this year, employment and bank account restrictions apply

-For this period you are only allowed to borrow £500

-After these twelve months you are 'discharged' from bankruptcy and your credit rating begins to repair

> Your house may be seized

-If there is equity in your house it would be seized. You would normally be given 6 months to leave

-You can often buy back your house for £211, if it contains no equity

-If you are renting you may continue to do so

> Certain jobs may be at risk

-These include positions in the police force and military, as well as financial, accounting and legal professions

-You are also not allowed to be a company director for the year of your bankruptcy

-Most other jobs are safe, though it is best to check

> You use a Basic Bank Account

-For the year of your bankruptcy you are not allowed to hold a current account

-Instead you use a 'Basic Account', which does not offer an overdraft facility, chequebook and so on. These are available from most High Street banks.

> Credit rating clear in 6 years

-Going bankrupt is the worst thing that can happen to your credit file

-After 6 years the record is removed

-Occasionally you may be asked to declare if you have ever been declared bankrupt before

> Your name is put in the newspaper

-It will be published in your local paper as well as the London Gazette

-The position will be at the back, along with the list of births and deaths

-It will only be included for one edition. Your employer may find out

> Cars worth over £1500 may be seized

-If you need a car for work, you will be required to downsize to a cheaper model

-HP payments can sometimes be continued, depending on circumstances

> Windfalls may be seized

-Inheritences and other windfalls may be seized by the court if they appear during the three years of your monthly payment programme

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