Bankruptcy

If no other debt relief option is available to you because of your circumstances, then as a last resort you may have to face bankruptcy. This can have a considerable long-term effect on your credit rating but if your debt problem has escalated beyond any other solution then you may not have much of a choice.

Your lenders may apply for bankruptcy proceedings (if your debt exceeds £750), or you can also petition for your own bankruptcy. If an IVA (Individual Voluntary Agreement) was in effect, then the Insolvency Practitioner handling the case can initiate proceedings.

A number of consequences are related to filing for bankruptcy, including the cancellation of your credit cards, and serious penalties such as the loss of your pension and insurance policies, or even possibly the loss of your business and your home.

Most bankruptcies are discharged in 12 months in England and Wales. This is the amount of time before you are released from your previous debts and restrictions related to bankruptcy are lifted. In other parts of the UK, the Bankruptcy Law defines different periods before discharge.