How to go bankrupt

If you’ve exhausted all other debt options and are ready to take on a decisive solution such as bankruptcy, it’s important you understand how to complete the process properly. That way you can ensure there are no issues further down the line as you follow the path to debt recovery.

PayPlan’s team of experts are on hand to answer any questions you may have but, for now, we have created this guide. It will take you through step-by-step – how to go bankrupt, what the process involves, and what you need to consider at each stage.

Step 1: Ensure you’ve considered all available options

Bankruptcy really is a final, last resort so check that there are no other options available to you first – such as an Individual Voluntary Arrangement Solution or Debt Relief Order. Before you discover how to file for bankruptcy, speak to an impartial financial advisor.

Step 2: Check that you are eligible for bankruptcy

To be deemed eligible for bankruptcy, there are certain criteria you must meet. For example, you must be a resident of England, Wales or Northern Ireland, have proof that you have no disposable income to repay debts and have little to no assets.

We have produced an in-depth guide on this, which can help when making this decision.

Step 3: Prepare for your new circumstances

Once you apply for bankruptcy, your bank accounts may be frozen straight away, so it’s a good idea to get some money out beforehand if you can. This means you can still buy things you need while you wait for your application to be processed.

Why your bank accounts may be frozen

Your bank accounts may be frozen by your Bank because the Official Receiver will be taking over control of your money and property. Everything tied to you will be reviewed and so you won’t be able to use it.

Who is the Official Receiver?

The Official Receiver works for the Insolvency Service and is the person who will take control of your property and assess whether you can afford to make any payments. They will inform your creditors that you are applying for bankruptcy and will also advertise your bankruptcy in the London Gazette – a financial newspaper.

Step 4: Pay The Bankruptcy Fee And Fill In The Application

If you are eligible and feel that bankruptcy is the only solution left for your situation, you will need to pay a fee of £680 to apply to go bankrupt. You’ll also need to fill out a form on the Gov.uk website.

If you don’t have the £680 up front – and we understand it’s unlikely you will – you can pay this in instalments if you are paying by debit or credit card. This means that everyone has the chance to take on bankruptcy and have a fresh start once it is completed.

Before you send your bankruptcy application, you will be asked to confirm certain information that you have provided. Failure to do this may result in a criminal prosecution, if you don’t declare all of your assets or include false information. You will be asked to confirm:

•   That you agree to a credit check being performed on you.
•   That the information is correct.
•   That you are the person named on the application form.

Once you have confirmed and agreed to this, the checks can begin to start the bankruptcy application process.

Step 5: Wait for a decision

It can take 28 days for the adjudicator to make their decision about your bankruptcy application. They will either make a bankruptcy order with your information or reject your application. They may also be in touch if they need any further information about something on your form. If this is required they are then allowed 14 more days to consider your bankruptcy.

What to do if your bankruptcy application is rejected

If your application is rejected and you don’t agree with the decision you can ask the adjudicator to review it again. If they still reject it after a review, you can appeal to the court. To do this, you will need to fill in this form – called an N161 form.

Step 6: Work with the Official Receiver

Once your bankruptcy is confirmed, a bankruptcy order will be made and your assigned Official Receiver will be in touch within two weeks. They will want to discuss the bankruptcy with you and will ask to set up a phone interview.

It’s important you comply with everything the official receiver asks of you. If you don’t, you may come up against some restrictions and your bankruptcy could be discharged or suspended.

Step 7: Wait for the bankruptcy to complete

The bankruptcy process takes 12 months to complete and once this time is up you will be discharged. This means that you can look to rebuild your credit rating slowly over time and that the restrictions bankruptcy placed upon you will be lifted. We have a guide available that takes a look into how long the bankruptcy process takes, to help you understand this final stage.

If you have any further questions about the bankruptcy process, then get in touch with our team today who will be able to answer any queries you may have. Call on 0800 316 1833 or fill in our contact form for a callback.