Bankruptcy is one way of dealing with debts that you cannot pay. Bankruptcy should not be taken lightly as it may mean that you could lose your home and anything else you own of value i.e. such as your car if it is worth more than £1,000. To be able make yourself bankrupt, you must owe at least £750.00 and you must petition (apply) to the Court on the ground that you cannot pay your debts. You must fill in a bankruptcy petition and a form giving full details of your income and expenditure and details of any property and goods you own.
The advantages of Bankruptcy are:
- You no longer have to deal with certain creditors as this will now be done by the Official Receiver.
- You will no longer have to pay certain creditors but it is advisable to continue to pay your mortgage or rent and utility bills such as gas and electricity.
- Bankruptcy will last for 1 year and you are automatically discharged which means that you are no longer responsible for most of your debts.
- Once you decide to become bankrupt, your creditors are forced to accept this.
The disadvantages of bankruptcy are:
- It can be costly to become bankrupt. The overall cost is approximately £640.
- There is a big possibility that you may lose your home and other valuable goods.
- Creditors like your mortgage lender are not affected by bankruptcy and may still take action against you for the debt i.e. repossession of your home.
- You may find it difficult to get credit in the future.
- Your bankruptcy will be advertised in the Belfast Telegraph.
- Be careful as bankruptcy may affect certain jobs i.e. Solicitors.