What is bankruptcy?
In the last few years there's been a noticeable trend in the rise of the number of young people declaring bankruptcy, with the majority of individual bankrupts being under the age of 30.
What is it?
Bankruptcy is a court order you can apply for if you're in debt. It may be the best way for you to free yourself from excessive debts you simply cannot pay by sharing out any assets you have among your creditors.
Someone you owe money to could also make you bankrupt, even if you don't apply for it through your own choice.
Who is affected by bankruptcy?
Anyone can go bankrupt, including individual members of a business partnership. But remember, you don't have to become bankrupt just because you're in debt; there are other options available to you.
The proportion of younger bankrupts, aged between 18 and 29, has risen from just under 8% in 2001 to nearly 19% in 2005. In 2007, nearly 1,000 graduates in the UK were forced to declare themselves bankrupt.
For many it has become less of a stigma and increasingly a lifestyle choice in order to write off the debts they owe.
How am I made bankrupt?
By debtor's petition: this is where you make yourself bankrupt. To do this you must contact your local court to find out where your nearest county court dealing with bankruptcy is situated. If you live in London you should contact the High Court. You have to pay a £150 court fee and £360 deposit.
By creditors' petition: If you owe people £750 or more they can make a creditor's petition for your bankruptcy at a County Court.
Where is the bankruptcy order made?
The High Court in London or a local county court.
Who deals with my case?
The Official Receiver: a civil servant who will act as a trustee for your estate, reporting both to court and to your creditors.
An Insolvency Practitioner: licensed accountants or solicitors who can be appointed as trustee instead of the Official Receiver.
Who do I need to tell?
Your mortgage lender, if you have one, as they may repossess your house if you can't pay.
Banks and building societies: when opening new accounts you must tell them you are bankrupt, just as you must inform your trustee of any money in the account above that needed for basic living expenses.
Utilities companies (phone, electricity, gas): they often want a deposit in advance for their services.
When will it end?
You are usually discharged from bankruptcy after one year and the money you owe can usually be written off.
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