Declaring Bankruptcy
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Filed under Bankruptcy
Declaring bankruptcy is always a difficult decision. Most of us fall in debt and have no choice but to file for bankruptcy. The reverberations of bankruptcy are many years after debtors have been discharged. In the UK, the bankruptcy laws were changed in 2004. It helped people to reduce their discharge time from three years to one year or less.[br]
Declaring Bankruptcy: Forms
Filing bankruptcy in the UK requires two forms to be filled and submitted to the court. These forms can be procured free of cost from your local bankruptcy court or online from any insolvency services website.
· The first form is the Bankruptcy Petition form which is called Form 6.27. It is your request for bankruptcy.
· The second form is known as Statement of Affairs form, which is also known as Form 6.28. You will include your asset details, liabilities and contact information of your creditors. It is your formal declaration of insolvency.
Declaring Bankruptcy: Costs
The costs of filing bankruptcy include:
· A deposit of ₤360 pounds for the administration of your bankruptcy.
· A court fee of ₤150.
· A fee of ₤12 if you testify your Statement of Affairs in the High Court or in the presence of a solicitor.
Declaring Bankruptcy: Points to Consider
Though the new bankruptcy rule helps debt ridden people discharge their debts in a year or less¸ it has certain flaws. For example, if a trustee has not sold your home in three years, you cannot claim it back. Citing another instance, if you make a lot of money, say by winning a lottery within the bankruptcy period, the amount cannot be claimed. Also, you can be ‘credit blacklisted’ for up to 15 years.
Declaring Bankruptcy: Alternatives[br]
Other alternatives to declaring bankruptcy include:
· Going into administration: If your debts are less than ₤5000 and have a regular income, the court may agree to a payment plan or an administration order to pay your creditors under its supervision.
· Individual Voluntary Arrangement: The IVA helps you plan how to pay a percentage of your debts to creditors over a specified period of time. The time period is usually up to five years. The IVA ensures more control over your assets. Also, the sum paid overall is less than the original amount.
Declaring bankruptcy is difficult but examine the other alternatives too, if you are not convinced.