Frequently asked Bankruptcy questions
- How does bankruptcy work?
Bankruptcy is a formal insolvency process that can write off the unsecured debt
you can't afford to repay. In Scotland, you can only apply to enter bankruptcy by
going to a Sheriff Court.
If your bankruptcy is agreed, all payments, interest and charges on your unsecured
debts will be stopped and rights to your assets (your valuable belongings, including
your home if you're a homeowner) will be handed to a Trustee. Your assets will normally
be sold to help repay your lenders.
At the end of your bankruptcy order (normally after a year), you will be 'discharged'
- and any unsecured debt you haven't repaid will be written off.
However, keep in mind that bankruptcy will have a serious impact on your credit rating - and that
you may be expected to make regular contributions towards
your debts for up to three years, if you can afford to do so. These payments will
be made to fit around your other living costs, such as bills.
- How do I know if I qualify
You'll only qualify if you really can't afford to repay your unsecured debts within
a reasonable period of time. You must also have total unsecured debts of £1,500
or more. Finally, at least one of your lenders must be taking court action against
you, or agree to you making yourself bankrupt.
However, there are a few things that could affect whether your application is approved
by the Court. To find out more about whether bankruptcy could help you, call us
0800 505 3848.
- Will I lose my home if
I go bankrupt?
If you're a homeowner (and not a tenant), your home could be sold to help repay
your debts. If you're concerned about this, talk to us on
0800 505 3848
and we'll see if you are eligible for any solutions that don't put your home at
- What does bankruptcy
There is a £200 fee, payable to the Accountant in Bankruptcy (AiB), when you apply
- What if I don't qualify
You may be concerned that you won't qualify for bankruptcy - for example, if your
level of debt isn't high enough. Or you may have had your application turned down.
Either way, we could still help you find a way out of debt.
Call us and we'll help you get the help you need with your debts.
- What are the disadvantages
You should remember that bankruptcy is an insolvency solution that will have a major
impact on your credit rating. A record will remain on your credit history for six
years, and obtaining further credit is likely to be very difficult in this time. Your bankruptcy will
also appear in the publicly available Register of Insolvencies.
However, not getting the help you need could have even worse consequences in the
long run, so don't hesitate to contact us if your debts are causing you problems.
Could Bankruptcy help me?
Bankruptcy is a form of insolvency. If you can't afford to repay your debts within
a reasonable amount of time, bankruptcy might be the best way to put them behind
you so you can move on.
That's especially true if you have a low / irregular income and you don't think
your situation is going to get any better. One of the best things about bankruptcy
is you won't have to make any monthly payments if you can't afford to.
Just remember that bankruptcy is a 'last resort' - and it won't even be an option
if you can't show that you are insolvent.
If you're not sure about the best way to tackle your debts, you can call us on
0800 505 3848. One of our advisors will be able to tell
you if bankruptcy really is right for you.
How bankruptcy works
If you're declared bankrupt, your unsecured debts will be written off on successful
completion, which normally comes after a year. You'll then be completely free of
the debts covered by the agreement.
However, it also means some of your possessions (your home, for example, or your
car) can be sold off so your lenders can get back some of the money they're owed.
If you enter bankruptcy, you'll be protected against your lenders while it's in
progress - and you'll probably be 'discharged' from bankruptcy after one year (although
there are some exceptions, depending on your past conduct).
If you can afford to do so, you will normally have to make monthly contributions
towards your debts for up to three years, based on what you can afford alongside
your other living costs. You will make this payment to an IP (Insolvency Practitioner)
each month. We have in-house IPs who will look after your case and will do what
they can to ensure your payment plan runs smoothly.
Bankruptcy is sometimes called sequestration in Scotland. Both words mean exactly
the same thing.
Downsides of bankruptcy
There are quite a few downsides to bankruptcy. Here are some of the ones that might
Your assets can be sold off so your lenders can be paid some of the money they're
owed. You also won't be able to hold certain jobs if you've been declared bankrupt.
Your bankruptcy will be recorded on the Register of Insolvencies, which is publicly available.
Bankruptcy can affect your employment opportunities, in that it prevents you holding
certain positions, such as a company director.
And your bankruptcy will stay on your credit report for six years, meaning you may
find it difficult to obtain credit during this time. If you try to borrow more than £500,
you must also tell the lender you have been made bankrupt.
The chances are entering bankruptcy won't mean you lose your job. But, it does depend on your individual circumstances and the type of job you have.
Although it can help you put your problem debts behind you, going bankrupt can involve a £200 up-front cost. We could help.
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