When considering your options, one of the most recognised debt solution is Bankruptcy. Bankruptcy is the most severe consequence of debt and should never be entered into lightly. For some people, however, going bankrupt may be the most appropriate solution. It can be the best way to repay what they can of their debt, write off the rest – and make a fresh start.
Bankruptcy is a formal court procedure which you can start or which one or more of your creditors owed £750 or more can start. Your assets (with certain exceptions) are sold to help pay your creditors. However, you can usually keep your personal belongings, the contents of your home and your tools of trade (which may include your car) unless they have a high value.
If you have surplus income after meeting your essential household and personal expenses, you will have to make payments out of your income for up to 3 years.
Your assets and income are dealt with by a licensed and regulated insolvency practitioner or by a government official called the official receiver.
Bankruptcy usually lasts for 1 year, and once you have been freed (discharged) from your bankruptcy, you are released from your debts (with certain exceptions).