How do I apply for bankruptcy? I have around £25k debt and mortgage arrears
The former Debtors Petition and Statement of Affairs have since been replaced by an 8-part online form which you can access by entering ‘Apply for Bankruptcy’ into Google and following the prompts on the Insolvency Service’s website. You will initially be asked to provide some basic information, at which point a 12-digit security code will be emailed to you. Once you have this, you may proceed.
Care needs to be taken when completing the income and expenditure section as, if it is found that there is surplus income, you could be placed in an Income Payments Agreement (IPA) for 36 months. We were very surprised to find the Insolvency Service generously inviting us to claim costs for things like hairdressing, social clubs, alcohol, tobacco, entertainment, newspapers, magazines and gifts – but guess what? These things are not allowed!
We counted around 18 separate items that would definitely not be allowed and if you happened to include any of these in your income and expenditure, you would have unwittingly painted yourself into a corner. If you consider that an IPA of £250pm will cost £9000 over three years, we recommend you speak to our advisors. We are very aware of the importance of the income and expenditure and know exactly what may be claimed and for what amount.
Please note that entering into bankruptcy will not directly affect your property (you mentioned arrears) but if you intend giving up the property, any shortfall will also be included in the bankruptcy. We have found cases where people are in hopeless negative equity and really struggling with high monthly payments on mortgages / secured loans – in these cases, it might be best to surrender the property and go into rented.
Feel free to call us with any other questions or for bankruptcy help on 01425 600129, we are here to help. Our staff are ex-financial services and have the experience to get you the best result every time. We look forward to hearing from you.