As much as I loved my Nan when I was growing up...
The 5 things you need to do before going bankrupt
UPDATE 5 April 2016: This article was originally published in March 2014. The bankruptcy application process for people living in England, Wales and Northern Ireland is changing in 2016. Visit our bankruptcy changes page for more information.
If you’ve made the decision to go bankrupt then it’s important for you to prepare yourself for the big day. It’s also key that you take care of any loose ends that could potentially trip you up.
We want to make sure you take all the right steps before you commit yourself to bankruptcy.
This simple guide will give you a few handy tips to make sure that you’re prepared.
1. Raising the fee
Bankruptcy costs £705 but if you’re in receipt of certain benefits or your income’s under the set threshold then you can apply for a discount of £180 (using form EX160A), reducing the cost to £525. The fee needs to be paid in court on the day of your bankruptcy. It might take you some time to raise the fee yourself or you could consider asking family and friends for help.
(Update July 2016: Bankruptcy fees have changed. You can find the updated bankruptcy fees on our website)
(Update July 2016: you now apply for help court fees by filling in an online form)
If you cannot raise the fee through any other means you may be able to apply for help through a trust fund, from a charitable organisation or your utility provider.
2. Change your bank account
If you’ve got debts with your bank then your account is likely to be closed down when you go bankrupt. We recommend that you open a new bank account before you go bankrupt. Most high street banks will generally have a clause in their terms and conditions stating that your account may be closed down if you go bankrupt.
The only bank that does not have this clause is Barclays. However, if you already have debt with Barclays you could consider approaching a credit union for an account, or even asking a trusted partner, family member or friend if you can have your income paid into their account.
3. Complete your forms
When you go bankrupt you need to complete two bankruptcy forms. The larger form is the Statement of Affairs (6.28) and the smaller form is the Debtor’s Bankruptcy Petition (6.27). Also, if you qualify for the court fee being waived then you will also need to complete the application for a fee remission form (EX160). (Update July 2016: you now apply for help court fees by filling in an online form).
You can find all of these forms as well as guidance notes to help you complete them in our bankruptcy forms blogpost. It’s really important that you take 3 copies of the 6.27 and 6.28 forms when you go to court, so please photocopy them when you’ve completed them. Your bankruptcy cannot be granted without 3 copies of the forms and photocopying in the court on the day can be pricey and stressful.
4. Book your appointment
You need to visit your local County Court to declare your bankruptcy. Not all courts deal with bankruptcy so you can find the details of your local court by putting your postcode into the court finder.
Your search may come up with more than one court but you should use the closest court to you that offers bankruptcy appointments. The only exception to this is if you live in the London area. Most, but not all, boroughs of London use the High Court in central London.
You should call your court to check that this is the right court to use. Make sure you give yourself enough time to have completed the first 3 steps before you book your appointment.
5. Attend your hearing
You should ensure that you arrive in court in plenty of time for your appointment. The process varies at each court so you can find out what this is when you call to book your appointment.
In most cases you will take your forms to the front desk and they will be checked by a court clerk or District Judge. You may have to speak to the Judge but you shouldn’t feel worried about this, it will generally be in a side room in the courts for a short time.
You can take a family member or friend with you but this isn’t necessary as the Judge will mainly want to check that bankruptcy is the best solution for you. The majority of courts will declare your bankruptcy on the day which means you’ll be on your way to getting your debts sorted out. This marks the beginning of your bankruptcy and the start of your debt free future.
To determine if bankruptcy is indeed the best option for you, use our online advice tool Debt Remedy.