Should I go bankrupt? UK

If you’re a UK resident and are thinking whether or not you should declare yourself bankrupt, there are many things you need to carefully consider before making your final decision.

When we first speak to our clients, the initial fact-find and discovery provides them with all they need to know when making the decision to enter personal bankruptcy or not. However, we look at our clients’ circumstances differently – we look at the debt, but also the person behind the debt. We consider the following critical information:

1. Amount of debt, and who it’s owed to?
2. What assets are there?
3. Family situation. Is there anyone else that’s going to be impacted by the bankruptcy order? If so, then what can we do prior to the bankruptcy to secure their interests. 
4. If they are a joint property owner, is the property registered as joint tenants or tenants in common? Most joint mortgages taken out are registered as joint tenants and this may not be suitable, so we may need to look at re registering the title as tenants in common. This secures a partner’s interests and avoids difficulties further down the line. 
5. Can bankruptcy be avoided? If so then it should. There is no point entering bankruptcy if it’s the wrong choice as it will be a mistake that a person will pay for dearly. 
6. We look at their income. The reason we must do this is because if their income is greater than their fixed reasonable living costs then there will undoubtedly be what’s called an income payment agreement. An income payment agreement takes all surplus income from a bankrupt for 3 years. Although the bankruptcy only generally lasts for 12 months, the income payment agreement is for 3 years whilst affordable. If their circumstances change and their income isn’t sufficient to make these payments then they’d need to contact the insolvency service so the income payment agreement/order is adjusted or removed altogether. 
7. We must look at future inheritance. If a person enters bankruptcy and during that period they receive an inheritance, they will lose it. The original bankruptcy debts and the Secretary of State fees and potential trustees’ fees and remuneration will increase the original bankruptcy debts substantially. Therefore, if a person is likely to receive an inheritance then it is highly important to have the will changed some considerable time before declaring bankruptcy, perhaps utilising a trust, so that the bankrupt does not benefit directly.

In summary:

A personal bankruptcy will provide the debt relief needed to have a fresh start that will write off all the unmanageable debt. Enabling a person to enter the protection of bankruptcy, get back to zero and move on with their life if they are in this situation:

• No assets to protect;
• No property with equity, or equity that they don’t mind losing into the bankruptcy;
• Are not in employment that is going to be affected by a bankruptcy order;
• Doesn’t have surplus income by the time we have deducted all of their monthly living expenditure;
• Are not likely to be receiving an inheritance.

To speak to us in relation to creating a strategy for your debt and YOU, then call us today or take our free 30 second online assessment and we’ll call you straight back!