Does bankruptcy clear all debts

Bankruptcy – is it right for me?

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Does bankruptcy clear all debts

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We will assess your situation to determine if bankruptcy or another formal solution such as an Individual Voluntary Arrangement or a Debt Relief Order is your most suitable choice.

But, if all other options as been explored then it's better you take the bankruptcy plunge now rather than continuing to struggle to make payments. You would only be delaying what we hope to be the start of your financial rehabilitation.

If you're a homeowner either solely or with a partner - we will look to see how bankruptcy could impact all parties.

If you're a business owner or are self employed - it may be advantageous not to go bankrupt so avoiding restrictions that may impede you trading. We can explain how you may be better served by alternative options.

To apply for your own bankruptcy there are fees payable to the Insolvency Serivce.

These total £680 and comprise of a £130 adjudicator fee and a £550 Official Receiver’s fee.

Bankruptcy – New York frequently asked questions

Bankruptcy is a legal proceeding in which an individual who cannot pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. (see New York Court Directory) Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.

2. What Can Bankruptcy Do for Me?

Bankruptcy may make it possible for you to:

  • Eliminate the legal obligation to pay most or all of your debts. This is called a “discharge” of debts. It is designed to give you a fresh financial start. (see bankruptcy – New York exemptions)
  • Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments. (Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without payment.)
  • Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.
  • Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
  • Restore or prevent termination of utility service.
  • Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe.

3. How can I get a copy of a bankruptcy filing?

The federal judiciary proves public access to federal appellate, district and bankruptcy court documents through Public Access to Court Electronic Records (PACER), an electronic public access service.

Bankruptcy cannot, however, cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually not possible to:

  • Eliminate certain rights of “secured” creditors. A “secured” creditor has taken a mortgage or other lien on property as collateral for the loan. Common examples are car loans and home mortgages. You can force secured creditors to take payments over time in the bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money if your property is taken. Nevertheless, you generally cannot keep the collateral unless you continue to pay the debt
  • Discharge types of debts singled out by the bankruptcy law for special treatment, such as child support, alimony, certain other debts related to divorce, some student loans, court restitution orders, criminal fines, and some taxes. (see New York Non-Dischargeable Debts)
  • Protect cosigners on your debts. When a relative or friend has co-signed a loan, and the consumer discharges the loan in bankruptcy, the cosigner may still have to repay all or part of the loan.- Discharge debts that arise after bankruptcy has been filed.

5. How often can I file bankruptcy?

You cannot receive a discharge in a Chapter 7 case if you received a discharge under a Chapter 7 case filed in the last eight years or a Chapter 13 filed in the last six years. You cannot receive a discharge in a Chapter 13 case if you received a discharge under a Chapter 7 case filed in the last four years or a Chapter 13 filed in the last two years. If didn’t received a discharge in the previous bankruptcy filing, depending on why this is the case, you can file and receive a discharge without any time restrictions.

6. What Different Types of Bankruptcy Should I Consider?

  • There are four types of bankruptcy cases provided under the law:
  • Chapter 7 is known as “straight” bankruptcy or “liquidation.” It requires a debtor to give up property which exceeds certain limits called “exemptions”, so the property can be sold to pay creditors.
  • Chapter 11 , known as “reorganization”, is used by businesses and a few individual debtors whose debts are very large
  • Chapter 12 is reserved for family farmers.
  • Chapter 13 is called “debt adjustment”. It requires a debtor to file a plan to pay debts (or parts of debts) from current income.

Most people filing bankruptcy will want to file under either chapter 7 or chapter 13. Either type of case may be filed individually or by a married couple filing jointly. (see New York Bankruptcy Law’s Chapter 7 or 13?)

7. Is New York Chapter 7 (Straight Bankruptcy) Bankruptcy Right for Me?

In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for your giving up property, except for “exempt” property which the law allows you to keep. (see bankruptcy – New York exemptions) In most cases, all of your property will be exempt. But property which is not exempt is sold, with the money distributed to creditors. If you want to keep property like a home or a car and are behind on the payments on a mortgage or car loan, a chapter 7 case probably will not be the right choice for you. That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt. (see New York Chapter 7 Bankruptcy)

8. Is New York Chapter 13 bankruptcy (Reorganization) Right for Me?

In a chapter 13 case you file a “plan” showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property–especially your home and car–which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind. You should consider filing a chapter 13 plan if you:

(1) own your home and are in danger of losing it because of money problems; (2) are behind on debt payments, but can catch up if given some time; (3) have valuable property which is not exempt, but you can afford to pay creditors from your income over time.

You will need to have enough income in chapter 13 to pay for your necessities and to keep up with the required payments as they come due. (see New York Chapter 13 bankruptcy)

9. What Does It Cost to File for Bankruptcy?

It now costs $306 to file for bankruptcy under chapter 7 and $281 to file for bankruptcy under chapter 13, whether for one person or a married couple. The court may allow you to pay this filing fee in installments if you cannot pay all at once. If you hire an attorney you will also have to pay the attorney’s fees you agree to.

10. In New York What Property Can I Keep?

In a chapter 7 case, you can keep all property which the law says is “exempt” from the claims of creditors. New York exemptions provides list of the exemptions available for New York. In determining whether property is exempt, you must keep a few things in mind. The value of property is not the amount you paid for it, but what it is worth now. Especially for furniture and cars, this may be a lot less than what you paid or what it would cost to buy a replacement. You also only need to look at your actual equity in any property. This means that you count your exemptions against the full value minus any money that you owe on mortgages or liens. For example, if you own a $50,000 house with a $40,000 mortgage, you count your exemptions against the $10,000 which is your equity if you sell it. While your exemptions allow you to keep property even in a chapter 7 case, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind on payments. In a chapter 13 case, you can keep all of your property if your plan meets the requirements of the bankruptcy law. In most cases you will have to pay the mortgages or liens as you would if you didn’t file bankruptcy. (see New York Chapter 7 Bankruptcy or New York Chapter 13 Bankruptcy? and New York Non-Dischargeable Debts)

11. What Will Happen to My Home and Car If I File Bankruptcy in New York?

In most cases you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt. (see New York bankruptcy exemptions) Even if your property is not fully exempt, you will be able to keep it, if you pay its non-exempt value to creditors in chapter 13. However, some of your creditors may have a “security interest” in your home, automobile or other personal property. This means that you gave that creditor a mortgage on the home or put your other property up as collateral for the debt. Bankruptcy does not make these security interests go away. If you don’t make your payments on that debt, the creditor may be able to take and sell the home or the property, during or after the bankruptcy case. There are several ways that you can keep collateral or mortgaged property after you file bankruptcy. You can agree to keep making your payments on the debt until it is paid in full. Or you can pay the creditor the amount that the property you want to keep is worth. In some cases involving fraud or other improper conduct by the creditor, you may be able to challenge the debt. If you put up your household goods as collateral for a loan (other than a loan to purchase the goods), you can usually keep your property without making any more payments on that debt.

12. Can I Own Anything After Bankruptcy?

Yes. Many people believe they cannot own anything for a period of time after filing for bankruptcy. This is not true. You can keep your exempt property and anything you obtain after the bankruptcy is filed. However, if you receive an inheritance, a property settlement, or life insurance benefits within 180 days after your bankruptcy, that money or property may have to be paid to your creditors if the property or money is not exempt. You can also keep any property covered by New York bankruptcy exemptions through the bankruptcy.

13. Will Bankruptcy Wipe Out All My Debts?

Yes, with some exceptions. Bankruptcy will not normally wipe out:

(1) money owed for child support or alimony, fines, and some taxes;(2) debts not listed on your bankruptcy petition;(3) loans you got by knowingly giving false information to a creditor, who reasonably relied on it in making you the loan;(4) debts resulting from “willful and malicious” harm;(5) student loans owed to a school or government body, except if:– the court decides that payment would be an undue hardship;(6) mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor). (see New York Non-Dischargeable Debts)

14. Will I Have to Go to Court?

In most bankruptcy cases, you only have to go to a proceeding called the “meeting of creditors” to meet with the bankruptcy trustee and any creditor who chooses to come. Most of the time, this meeting will be a short and simple procedure where you are asked a few questions about your bankruptcy forms and your financial situation. Occasionally, if complications arise, or if you choose to dispute a debt, you may have to appear before a judge at a hearing. If you need to go to court, you will receive notice of the court date and time from the court and/or from your attorney. To find the location of the court that serves your area visit the New York Federal Bankruptcy Court Directory page.

15. Will Bankruptcy Affect My Credit?

There is no clear answer to this question. Unfortunately, if you are behind on your bills, your credit may already be bad. Bankruptcy will probably not make things any worse. The fact that you’ve filed a bankruptcy can appear on your credit record for ten years. But since bankruptcy wipes out your old debts, you are likely to be in a better position to pay your current bills, and you may be able to get new credit.

16. Can I Get a Credit Card After Bankruptcy?

Yes, there are several options available. While technically not a credit card you could use a bank or debit card to perform activities for which you normally would use a credit card. You also may be able to keep the credit card you already have if the creditor grants approval. If these options do not work you can get secured credit card which is backed by your own bank account.

17. Are Utility Services Affected?

Public utilities, such as the electric company, cannot refuse or cut off service because you have filed for bankruptcy. However, the utility can require a deposit for future service and you do have to pay bills which arise after your bankruptcy is filed.

18. Can I Be Discriminated Against For Filing Bankruptcy?

No. 11 U.S.C. sec. 525 prohibits governmental units and private employers from discriminating against you because you filed a bankruptcy petition or because you failed to pay a dischargeable debt.

19. Can Bankruptcy Help Get My New York Driver’s License Back?

If you lost your license solely because you couldn’t pay court-ordered damages caused in an accident, bankruptcy will allow you to get your license back.

If someone has co-signed a loan with you and you file for bankruptcy, the co-signer may have to pay your debt.

21. I’m Married, Can I File by Myself?

Yes, but your spouse will still be liable for any joint debts. If you file together you will be able to double your exemptions. (see New York bankruptcy exemptions) In some cases where only one spouse has debts, or one spouse has debts that are not dischargeable then it might be advisable to have only one spouse file. If the spouses have joint debts, the fact that one spouse discharged the debt may show on the other spouses credit report.

22. Can filing bankruptcy stop bill collectors from calling?

Yes. The automatic stay prevents bill collectors from taking any action to collect debts.

23. How long after filing will the creditors stop calling?

Once a creditor or bill collector becomes aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. After you file the bankruptcy petition, the court mails a notice to all the creditors listed in your bankruptcy schedules. This usually takes a couple of weeks. Creditors will also stop calling if you inform them that you filed the bankruptcy petition, and supply them with your case number. In some cases, you or your attorney should contact the creditor immediately upon filing the bankruptcy petition, especially if a lawsuit is pending. If a creditor continues to use collection tactics once informed of the bankruptcy they may be liable for court sanctions and attorney fees for this conduct.

24. Can I erase my student loans by filing bankruptcy?

Generally, student loans are not discharged in bankruptcy. In 11 U.S.C. sec. 523(a)(8) there are two exceptions to this general rule:

  1. The student loan may be discharged if it is neither – Insured or guaranteed by a governmental unit, nor

– Made under any program funded in whole or in part by a governmental unit or nonprofit institution.

  • The student loan may be discharged if paying the loan will “impose an undue hardship on the debtor and the debtor’s dependents.”
  • Student loans more than 7 years old used to be dischargeable under certain circumstances, but this provision was removed by an appropriations bill passed in October of 1998.

    Whether an exception applies depends on the facts of the particular case and may also depend on local court decisions. Even if a student loan falls into one of the two exceptions, discharge of the loan may not be automatic. You may have to file an adversary proceeding in the bankruptcy court to obtain a court order declaring the debt discharged.

    25. Where do I file if I haven’t lived in the same state or district for the last two years?

    If you haven’t lived in your current state for 91 days you must wait until you have lived there for 91 days and then file in your current state. If you lived in your current state for more than 91 days but less than two years, you will file in your current state but use the exemptions from where you lived for majority of the 180 day period immediately previous to the 2 year period before you filed. If you bought your home within the last 40 months and/or haven’t lived in your current state for the last 2 years then your homestead exemption may be limited.

    26. If I am going through a divorce how will my ex-spouse filing bankruptcy affect our divorce settlement?

    Alimony, maintenance, and/or support are protected from discharge. Divorce decrees and separation agreements are covered by 11 U.S.C. Section 523(a)(15). This section states that these debts are not dischargeable unless:

    (A) the debtor does not have the ability to pay such debt from income or property of the debtor not reasonably necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor and, if the debtor is engaged in a business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business; or

    (B) discharging such debt would result in a benefit to the debtor that outweighs the detrimental consequences to a spouse, former spouse, or child of the debtor.

    Does bankruptcy cover your debt from being sued by an insurance company?

    In some cases, bankruptcy may cover your debt from being sued by an insurance company. People involved in a car accident are sometimes sued for damages by another driver or family of the driver injured or killed in the auto accident.

    If the auto accident didn’t involve a DUI or DWI, and the estimated claim of the lawsuit is calculated into a Chapter 7 bankruptcy petition, it’s possible to discharge personal injury damages that the insurance company claimed.

    Compare your premium rates with auto insurance quotes from other providers by entering your zip code into our online comparison tool above!

    How do lawyers answer this question?

    Auto insurance laws can vary state to state. Below are some varying accounts of how different lawyers address the question of bankruptcy and an insurance company attempting to sue.

    The bottom line is that you will need to find your own attorney to evaluate the circumstances of your case.

    Compare Quotes From Top Companies and Save

    Why do some lawyers say some debts cannot be discharged in bankruptcy?

    Not all debts resulting from auto accidents will be discharged in bankruptcy, according to author Roderic Duncan in “Win Your Lawsuit: Sue in California Superior Court without a Lawyer” (2010). If an insurance company sues for damages resulting from

    If an insurance company sues for damages resulting from drunk driving, your debts might not disappear in a bankruptcy petition.

    If drugs, alcohol or reckless driving resulted in serious injury, real property liens placed by the insurance company to satisfy a legal judgment won’t go away after you petition for bankruptcy.

    Why do some lawyers say these debts will be discharged in bankruptcy?

    Attorney Derick C. Villanueva of Georgia disagrees with Roderic Duncan. He says that Chapter 7 of the United States Bankruptcy Code discharges debts “for personal injuries or death caused by the debtor’s operation of a motor vehicle while intoxicated.”

    That’s why Attorney Villanueva concludes that an auto accident due to driver error is likely to be dismissed in Chapter 7 bankruptcy.

    Harley Feinstein, a California attorney, concluded that an insurance company might eventually settle the damages sought within the driver’s existing auto insurance policy limits.

    If the insurance company knows that the driver has little or no financial assets and that she may seek protection under the US bankruptcy laws, there’s little reason for the insurance company to sue the driver for damages about the policy limits.

    In this scenario, the driver’s insurance company acts in bad faith by not settling the claim at the policy limit. The driver might pursue a claim against her insurance company in this instance.

    Attorney Mark C. Blane, licensed to practice in California, says that it’s likely that a driver’s debt that results from an insurance company lawsuit will be discharged in personal bankruptcy.

    However, the individual must first qualify for bankruptcy protection.

    Chapter 7 enables unsecured debts, such as an insurance company judgment or credit card debt, to be discharged.

    If a motorist has significant financial assets, Chapter 7 may not provide the most practical financial protection from the insurance company’s claim or lawsuit.

    How do I protect myself from this situation?

    Auto insurance can’t restore a loss of life, but it can pay for medical expenses and property damage. Purchasing your state’s lowest legal auto insurance limits may cost less, but purchasing higher auto insurance limits affords greater financial protection when an accident occurs.

    There’s never been a better time than right now to compare your auto insurance rates. Maybe you want to buy more auto insurance coverage but money is tight.

    Getting competitive auto insurance quotes lets you see how much your dollar will stretch to purchase greater auto insurance protection. Start by entering your zip code now!

    A Bankruptcy Attorney-Lawyer Can Help

    THE BANKRUPTCY ATTORNEYS AND LAWYERS at Barr, Jones & Associates can help ensure that the automatic stay is properly applied to your case. Our bankruptcy attorneys and lawyers can ensure that all creditors honor the automatic stay. We will navigate the bankruptcy process with you. Our goal is to ensure that you receive your bankruptcy discharge.

    Once the discharge is received, we can help you enforce protection against creditors that are not honoring it. Bankruptcy is a very complex area of law. Do not leave such an important matter in your life in the hands of an attorney that does not have the experience needed to do the job right.

    Our attorneys have the experience and reputation necessary to properly handle your case. Call today for your free telephone consultation to determine how the law firm of Barr, Jones & Associates can help you get back on the road to a financial fresh start.

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    does bankruptcy clear all debts

    Does bankruptcy clear all debts

    UPDATE 5 April 2016: This article was originally published in December 2011. The bankruptcy application process for people living in England, Wales and Northern Ireland changed in 2016.

    This week we’re investigating bankruptcy, to tie in with our new guide to personal bankruptcy. Today we’re looking at the myths that have grown around bankruptcy.

    Bankruptcy doesn’t always mean an empty wallet

    Bankruptcy is often a word that scares people. There are many myths surrounding it and a lot of these are widely believed by people looking for debt solutions.

    When we recommend bankruptcy as the ideal solution our debt advisors are often met with the same set of questions; these questions are usually coloured with bankruptcy myths that people wrongly believed to be facts.

    In this blogpost we’ll try and dispel the top 8 myths…

    Myth 1: My name will go in the paper/my neighbours will find out

    ‘Bankruptcies’ used to have a section in your local newspaper. This wasn’t done to shame debtors but was to inform creditors that may not have otherwise been aware. Bankruptcy is rarely advertised in the local paper now unless it’s an exceptional case and/or the official receiver believes that other creditors in the community may want to claim (usually self-employed local business cases).

    Your bankruptcy will be mentioned in the London Gazette, but this is a trade paper for creditors.

    Bankruptcy is a matter of public record and it’s available for the general public to see on the Government Insolvency Service website. Interested parties would need to search for you by name. This also applies to other forms of insolvency such as IVAs and DROs.

    Not all bankruptcies result in people losing homes. If you have negative equity you may be allowed to stay in the property.

    For the best advice contact us and speak to one of our bankruptcy specialists who can give free, tailored advice.

    Myth 3: If I go bankrupt I won’t have to pay anything!

    If you have any surplus income left over each month, you’ll be expected to pay it into your bankruptcy. This is called an ‘income payment arrangement’ and will last for three years. This happens to around 1 in 5 people* who go bankrupt.

    The more surplus you have, the more you’ll have to pay. But the official receiver will take into account all your living expenses so you’ll only be asked to pay an amount you can afford.

    * Insolvency Service stats based on bankruptcies in the last 3 years

    Myth 4: Bankruptcy lasts forever!

    Most bankrupts are discharged after a period of 12 months (although many have to continue to pay surplus income into the bankruptcy for a further two years).

    Bankruptcy is listed on your credit file for six years and may restrict any credit products available to you during this period. Most modern mortgage application forms ask specifically if you have ever been bankrupt.

    Myth 5: Creditors can’t make me bankrupt

    If you’ve broken the terms and conditions of a credit agreement your creditors can petition for your bankruptcy. They can only do this however if you owe them more than £750, and this is increasing to £5,000 from October 2015.

    However, bankruptcy from creditors is not common. They have to pay fees of over £1,000 so they’re only likely to try this as a last resort.

    The most common way for a creditor to make someone bankrupt begins with them sending a formal demand for payment called a ‘statutory demand’, followed by a ‘bankruptcy petition’. Both of these are usually delivered in person. If you get a statutory demand or bankruptcy petition, get in touch with us straight away for advice.

    Myth 6: Bankruptcy is heard in court with a judge – I’d be terrified!

    Bankruptcy is done in the nearest county court to you that deals with insolvency, however it’s not done in a court room with a bevy of observers.

    You may need to see a judge, but this is done in the judge’s chambers (his/her office) and all they want to be sure of is that you’re aware of your actions in going bankrupt and that you have been properly advised.

    The next time you hear anything is from the official receiver (OR) who deals with your bankruptcy. The OR will usually conduct his/her work by phone.

    Myth 7: You need an accountant to go bankrupt

    If you’re self-employed an accountant may be able to offer some advice but most advice can be taken free of charge from us.

    Some companies charge a fee for an ‘assisted bankruptcy’ service. This usually involves the firm charging for advice on how to fill in court forms. We offer this service free of charge.

    Myth 8: I’ll get kicked out of my rented property

    Most rental agreements have a section about insolvency and most of these agreements suggest that if you become insolvent that you must leave the property.

    This wording is usually used to protect the landlord in case of non-payment of rent. As rent is a priority outgoing this will need to be paid and accounted for in the budget you put together with the official receiver. As long the rent is paid most landlords will not ask a bankrupt tenant to vacate a property.

    And a bonus myth: I’ll never get another bank account

    When you petition for your bankruptcy your bank accounts will be frozen. Some banks will not allow an un-discharged bankrupt to continue to bank with them. However, there are still banks that allow bankrupts to open basic banking facilities and operate them while un-discharged. We can advise on which banks to approach.

    We hope we’ve managed to dispel some of the myths associated with bankruptcy but no matter what, it’s important that you seek free and independent advice before you decide this is the best solution for you.

    If you’re worried about how bankruptcy could affect you, or whether it’s right for you, use Debt Remedy to see how we can help.

    I am bankrupt and it is discharged this month.

    I am also having a divorce (they are linked, the husband took out lots of debts, some in my name and some on the house) he lives in the house, I am in rented accommodation with our two children.

    Do I have any claim over the house or contents (I left with very little) as my half is technically owned by the receiver?

    It would depend if the Official Receiver wants to sell these assets or receive payment for your share of them. There’s more information on how property is dealt with in bankruptcy on our website:

    The easiest way to know for sure would be to contact the Official Receiver’s office and asking them.

    i have employer sip shares some are available to sell now and some come available in another year. what happens with these shares if i go bankrupt? do i declare them all, or how many shares are available to sell?

    Thanks for posting.

    The shares could be sold as they may be considered an asset. The Official Receiver dealing with your bankruptcy will decide what happens to the shares, so it’s important to let them know about them.

    Hi. I’m a guarantor for some lease equipment for my husband business. He is a few days late and has never missed a payment. I have just had a statutory demand sent to me for the full amount of the loan. I have no way of paying it. The house has been mine for 20 yrs from a previous marriage. There is no equity in it and both my mortagages are interest only and one secured debt. Can the force me to sell my home to pay the 22k debt?. I’m really scared as I barely have enough to pay the bills as it is and my husband has not taken a wage fo the best part of 4 yrs

    Thanks for posting.

    I’m sorry to hear about this situation and can understand you must be very worried at the moment.

    We’ve got a page on our website about what to do if you receive a statutory demand and in what situations your creditors can send one. You may find it useful to read. You can find it here:

    When you receive a statutory demand you’re usually given 21 days to pay the debt or come to an agreement to pay it, for example by instalments.

    It’d be worth getting in touch with the creditor to let them know how much you can afford to pay towards the loan.

    If you do nothing about the statutory demand and the situation ends in bankruptcy – you’ll normally only have to sell your house if there’s equity in it.

    You can read more about how bankruptcy affects your home on our website:

    I hope this helps but if you need advice please give our Helpline a call.

    Hi. I have a creditor looking to make me bankrupt. I have no real assets but there is some equity in my house. I have 3 children the equity could possibly repay this singular deal, but not other debts….can one creditor so thos?

    I’m sorry to hear about this.

    A creditor can apply for bankruptcy as a last resort to get you to repay a debt. However, this means they have to pay the bankruptcy fees involved. Due to this, most creditors would only consider doing this if they’re sure you have

    enough assets or income to guarantee the bankruptcy will get them all

    their money back.

    We have a page on our website about creditors making you bankrupt, that you may find useful to read:

    I hope this helps,

    I owe £600k to a Cyprus bank. Seems that our offers to settle via a solicitor are failing. By the end of June a 3month stay (agreement with bank to not proceed with litigation in hope that agreements can be reached) will end.

    I am looking for advice whether to file for bankruptcy or something else. I don’t know where to start, but just want the nightmare to end.

    I have UK properties which I rent out + a home + pension + monthly income.

    UK rental properties: – There is no equity here because they are either in negative equity and have second charges on them to the value of a sum of money I owe a different creditor following a failed business venture. When they are sold the lender will be paid and then any equity paid to the creditor on the land registry document. This means there will be 0 to pay the Cyprus bank.

    Pension: – not retired yet, but not a massive pot.

    UK home: As the lender mortgage product would not allow a second charge a B133 Bilateral notice has been applied to the UK creditor. Not really sure what this means, but I guess it works like the above UK rental property situation. If i sell then there is nothing available for the Cyprus guys.

    We do not own our cars.

    If I add it all up including the £600k for Cyprus we can never repay it all in our lifetime. I believe my debt:income ratio is 190%

    Who can I talk to who can help me work out what is the best option?

    1. Do I wait for the bank to come after me in July?

    2. Do I file now for bankruptcy tell the bank I have started proceedings and there is nothing for them due to my debt ratio and hope they take the offer on the table?

    3. Is there another option?

    I have 2 children: 15 and 17 year old and don’t want to loose my house if possible.

    As you may be aware as Cyprus is an EU member state, so any Cypriot debts are treated the same as UK debts in bankruptcy.

    If bankruptcy is the right solution for you the Cypriot debt would be included and you’d be protected from action in all other EU member states (apart from Denmark who negotiated an exception to this rule).

    The question here is where you are currently based, as that determines your eligibility for UK insolvency. Between EU members states, where you can go bankrupt is determined by the location of your ‘centre of main interest’ – this is usually where you run a business or live.

    If this is the UK then bankruptcy here may be a solution for you, however we can only recommend a debt solution once you have had an advice session as there may be an alternative solution for you.

    As your situation is fairly complex, it may be worth you calling our advice line rather than using on online debt remedy tool so we can answer all of your queries.

    Gather up details of all of your debts, income, assets and notes them down, then give us a call and we can go through a debt advice session on 0800 138 1111 to give you tailor made advice.

    I hope this helps, and this gets sorted for you.

    hi. my wife and i went bankrupt on 01/03/2011. this year experian and callcredit deleted this info on the six years exactly. we now have good credit scores because we have been paying our bills on time. on 01/04/17 my wife applied to natwest for a loan and was declined. reason bankruptcy on equifax a month after the six years. not happy but we are trying to get it sorted. my question is in three months and it being removed if she applys to natwest will they still have this info on the bankruptcy?

    Thanks for your comment.

    Once your bankruptcy is discharged and your defaults have passed the six-year mark you will find that they are usually no longer listed on your report. This doesn’t automatically mean that you will be left with a clean rating and be able to get credit again instantly.

    It’s a good idea to get copies of your credit files, check for any mistakes on them and ask for any errors to be corrected. There can also sometimes be a delay in your credit file reflecting the end of the bankruptcy, if these haven’t been updated after 3 months you should try and address this.

    After bankruptcy, ratings-wise you’re essentially starting from scratch and will have to take time to build a credit file that is attractive to lenders. Often, the only way to do this is to take a form of credit such as a credit card, use it regularly, never miss any payment and stay within the agreed limits, being cautious.

    We cannot advise you as to whether if she reapplies for the loan in 3 months whether this will definitely be approved.

    I hope that this helps.

    Hi there, I have a question about bankruptcy. This is not a case of me wanting to become bankrupt.

    I actually want to know who pays out creditors when a person does go bankrupt? Is it the government e.t.c?

    The Government don’t pay money to the creditors in bankruptcy. Often creditors don’t get their money back, which is a risk they have to consider when offering credit to people.

    If someone goes bankrupt and they have valuable assets they can be sold and the money from the sale distributed between the creditors of the person going bankrupt. Fees are deducted by the person managing the bankruptcy in this situation, so it’s usually only a proportion of the money owed that goes back to creditors.

    My husband needs a debt solution nut we own our property. If I take over the house into my name only will it still be considered as an asset If he goes bankrupt? Currently I would say there is approximately £60k equity in the property. His debt is approximately 60k.

    My husband may go bankrupt but currently our mortgage is joint. I am applying to take the mortgage into my name only…. his debt is 60k and current equity in property is approx. 60k. Will the property still be taken into account if he goes bankrupt

    Thanks for your message.

    We’d advise you to call us to discuss this further and get advice which is tailored to your individual circumstances.

    And read more in our general guide to bankruptcy:

    I hope that this helps, please give us a call on: 0800 138 1111 (Mon-Fri 8am-8pm, Sat 8am-4pm)

    Do savings get put towards bankruptcy, if you have no income and would need to use those savings to live off? (food, rent)?

    Also, what happens if you dont have an Income Payment Arrangement, but then you start earning income after bankruptcy is discharged – is that two more years of paying creditors?