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Thinking About Cancelling Your Direct Debit To Your Energy Supplier?

Written by Alex Swindells on . Posted in Bankruptcy, Debt help.

From 1st October 2022, the energy price cap increased by 80%. Due to this, millions of households will see their energy bills rise, and those working on minimum wage, particularly those in a single-person household, will struggle to pay for their energy. 

On average, people who pay for their energy by direct debit will see their annual bill rise from £1,971 to £3,549 per household.

Because of this dramatic increase, some people are considering joining the Don’t Pay UK campaign, cancelling their direct debits to their energy suppliers until energy bills are reduced. 

However, if a person cancels their direct debit, it can result in severe consequences, especially if they have no plan, or means, to pay in the future.  

There are other ways to deal with rising energy costs, some of which we will cover in this blog.

What Happens If I Cancel My Energy Direct Debit

Drawing of people holding an online banking login page and a credit card in front of a tablet

You may be considering cancelling your direct debit to your energy supplier if you cannot afford your energy bills. But here is why you should not do that:

  • You could be sent a CCJ (County Court Judgement); a court will demand that you pay what you owe.
  • Your energy supplier could apply to a court for a warrant, which will enable them to enter your home to disconnect your supply. It is very rare for this to happen; it is more likely that your energy supplier will offer to install a prepayment meter before they take further action.
  • A debt collector agency (a company that specialises in collecting a debt), may pursue you until you have paid off your debt. 
  • Your energy supplier could issue you a fine or charge you an extra admin fee, so you may end up paying more.
  • If your energy bill is left unpaid, or if action is taken against you by the energy supplier, then this will be seen as bad debt. In this instance, your credit rating could be negatively impacted.

Direct Debits Are Cheaper

Drawing of different 'Sales 50% off' labels

Usually, paying your energy bills by direct debit can work out cheaper. 

Many energy suppliers offer a discount on your bill if you pay by direct debit. It may only be a small reduction, but this could make a big difference over the next two years whilst the energy crisis lasts.

However, if you cancel your direct debit without warning your energy suppliers, you may lose this discount if you decide to pay by direct debit in the future.

Another perk to paying your energy bill by direct debit is that it is easier for suppliers to refund you if you make an overpayment.

What To Do If You Can’t Afford Your Energy Direct Debit

Man holding an empty wallet

As soon as you realise that you are going to struggle to pay your energy bills, contact your energy supplier. They should be able to offer a solution to make it easier for you to pay your bills at the same time as ensuring that they receive what you owe them. 

Some energy suppliers are offering grants to help pay people’s energy bills, particularly for those who are most affected by the rise in energy costs. To find out if you are eligible for a grant, contact your supplier.

As previously mentioned, your supplier may offer to fit a prepayment meter, also known as a pay-as-you-go meter, if you are struggling to pay your energy bills.

Prepayment meters can help you budget because it is easier to keep track of what you are using; however, they work out more expensive in the long run.

In some circumstances, you may be able to switch your energy supplier if you find one that offers you a better tariff. However, if your current supplier sent you a bill over 28 days ago that you haven’t yet paid, then you will be unable to switch until you do.

Help With Energy Bills

woman doing accounting

There are debt solutions available to help if you are unable to pay your energy bills and have outstanding utility bill debt. 

For example, Swift Debt Help can offer (if eligible) an IVA (Individual Voluntary Arrangement). 

An IVA is a legally binding agreement that can be arranged by a licensed insolvency practitioner (IP) to help you pay off your debt in an affordable way. Before the payment plan is arranged and put forward to your creditors, your income and expenditure will be assessed by your IP. This is to ensure that you have enough money each month to pay for necessities, such as your rent/mortgage and food. Once an affordable amount for the payment plan is put in place, then you will have to pay the agreed amount each month and stick to the agreed terms. 

To be eligible for an IVA you have to:

  • Owe at least £5,000.
  • Have 3 types of debt with at least two creditors.
  • Have a regular source of income.
  • Live in England, Wales, or Northern Ireland.
  • Be unable to pay the money that you owe.

For more help and advice on cancelling your direct debits, or applying for an IVA, contact us to see whether you are eligible for a viable financial solution to assist you with your energy bills.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Five and twenty pound notes laid out on table

How To Pay Off Debt When You’re Unemployed

Written by Alex Swindells on . Posted in Bankruptcy, Debt help, IVA.

Unemployment can be stressful, particularly if you aren’t prepared for it when it happens. Not only do you have the pressure of looking for another job whilst trying to pay your utility bills and rent/mortgage, but if you’re already in debt, then this can add further stress if you’re unable to make regular payments. 

The average UK person has an unsecured debt of £3,817. The types of unsecured debt include credit cards, personal loans, or overdrafts. 

And, of course, if you’re unable to pay for the cost of living, you may see yourself going even further into debt with no means to repay your creditors. 

Paying off debt while unemployed can be hard; however, there are actions you can take to help limit the amount of credit you use. 

Additionally, there are debt solutions available, such as a DRO (Debt Relief Order) or a DMP (Debt Management Plan), that can help to relieve your financial stress.

Ways to Help Reduce Debt:

It is worth getting in touch with your creditors to explain your unemployment status and, because of it, that you’re struggling to make repayments. Your creditors may give you some breathing space on the proviso that you’ll restart paying your debt once you’re back at work. 

In the meantime, consider the below points:

  • Try to avoid further use of your credit card or dipping into your overdraft. 

Also, don’t be tempted to increase your overdraft or credit card limit since the credit will only help you temporarily, and you’ll put yourself further into debt, particularly if there’s interest to pay, which there generally is.

To help prevent you from using more credit, cut down on your expenditures. Only buy the necessities. Set out a budgeting plan and stick to it. With any money left over, use it to slowly start chipping away at your debt. 

  • Avoid taking out any more payday loans. 

Increasing your debt whilst you’re unemployed will make your situation worse. This is especially the case with payday loans because they tend to have very high-interest rates. 

Options for Debt Help When Unemployed

If you’re in debt and without a job, then it may feel like there aren’t any means to ease your financial situation.  

However, some options may be available to you if you meet certain requirements.

Below, we have provided a summary of these options to help with your debt.

1. Breathing Space

If you live in England or Wales, you can get temporary protection for up to 60 days from your creditors while you consider your options and get debt advice. This is a Government scheme called ‘Breathing Space’.

If you receive it then:

  • enforcement action cannot be taken against you
  • your creditors cannot contact you about debts included in your Breathing Space
  • your creditors cannot add interest or charges to your debt, however you will ultimately remain responsible for your debt repayments

To apply for the ‘Breathing Space’ scheme, you need to talk to a debt adviser who will check you are eligible. If you are, then will submit an application on your behalf. You can look for a ‘debt adviser’ on the MoneyHelper website.

2. DRO (Debt Relief Order)

A DRO allows your debt, and any interest owed, to be put on hold for twelve months. 

To be able to apply for a DRO, your debt must not exceed £30,000, you must reside in England, Wales, or Northern Ireland, and you can’t be a homeowner. 

Once you have a DRO in place, your creditors will be unable to take legal action against you.

After twelve months, when the DRO is complete, if you continue to meet the eligibility criteria, then any outstanding debt will be written off. 

Although this can be a useful solution for many people, one essential criteria that must be met is that you have less than £75 per month left over after paying your essential bills. If you get back into work during the twelve-month period, and you have more than £75 available then it is likely that you will have to find an alternative debt solution.

Woman paying with card via her phone

3. Bankruptcy

Bankruptcy could be a debt solution to consider. This is a legal status where your valuable assets (these do not include ‘tools of the trade’ or items that are necessary for living, such as clothes and furniture) are sold to pay what you owe to your creditors.  

You can file for bankruptcy regardless of how much debt you’re in. When applying, you’ll need to pay £680 to the Insolvency Service. 

Once you’re declared bankrupt, creditors can no longer take legal action against you. 

The details of your bankruptcy will be published on government-owned websites; the Gazette, and the Insolvency Practitioner. 

Additionally, the details of your bankruptcy will go on to your credit report and will remain there for six years.

There are bankruptcy restrictions that you’ll have to abide by, but you are usually released from these after twelve months.

Bear in mind that people in receipt of benefits, with no other income, will not be asked to make a monthly payment contribution into the bankruptcy to reduce their debts. However, if a person does become employed during their bankruptcy, they may be required to make regular monthly contributions.

4. DMP (Debt Management Plan)

A DMP is an informal arrangement between you and your creditors where you use a third-party company to set up a payment plan to pay off your debt. 

Your financial situation will be assessed and a figure decided as to what you can realistically afford to pay each month. 

You’ll still have to pay the full amount that you owe to your creditors; however, since your monthly payments will be reduced, your finances will be a lot easier to manage. 

Additionally, the payment plan is flexible, so if your situation changes, then a new amount that you pay each month can be negotiated.

This is a suitable option for you if you have many unsecured debts (non-priority debts). 

The DMP will come to an end once all of your debt has been cleared. 

Using a calculator for debt management

5. Individual Voluntary Arrangement (IVA)

An IVA (Individual Voluntary Arrangement) is a legally binding but flexible agreement that can be arranged by an Insolvency Practitioner to help you repay your creditors in an affordable way over a set period of time. 

Before the payment plan is arranged and put forward to your creditors, your income and expenditure will be assessed by your IP. This is to ensure that you have enough money each month to pay for necessities, such as your rent/mortgage, bills, and food. 

Once an affordable amount for the payment plan is decided, and if it’s accepted by your creditors, then you’ll have to pay the agreed amount each month and stick to the agreed terms until your circumstances change.

If you find a new job, and your income increases, then get in touch with your Insolvency Practitioner who will reassess your circumstances. If you can afford to pay more towards your debts, then you will be required to do so.

We hope that you’ve found this blog useful by discovering ways to help you out of debt.

If you want to find a debt solution that is right for you, then get in touch with Swift Debt Help, and one of the experienced members of the team will call you to discuss your options. 

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Bankruptcy

Top 5 Bankruptcy Myths

Written by Alex Swindells on . Posted in Bankruptcy, Debt help.

Have you been struggling with debt and looking for a solution to help you out of your financial situation? You may have considered bankruptcy but are concerned that there’s a stigma attached to choosing this debt solution. Well, there are a few myths regarding bankruptcy that we’re going to uncover in this blog, which will, hopefully, help you see a clearer picture of what bankruptcy involves. 

Before we go into some of the bankruptcy myths, let’s summarise what bankruptcy is.

Bankruptcy is a legal status that allows you to obtain a clean slate if you’re in debt. You can file for your own bankruptcy regardless of how much your debt is; however, if your creditor decides to apply to make you bankrupt, then your debt needs to exceed £5,000.

It costs £680 to apply for bankruptcy. To pay for this as well as any other administrative fees some of your assets may be sold. Whatever money is left will be shared between your creditors to pay off your debt. 

If you manage to repay all of your creditors, then you may apply to have your bankruptcy cancelled. 

After twelve months, regardless of whether you’ve repaid all of your creditors or not, your bankruptcy should come to an end as long as you’ve stuck to the agreed terms. 

So, what are the bankruptcy myths?

1. Everyone will know that I filed for bankruptcy

Once you’ve been made bankrupt, then it does become public information. The details of your bankruptcy will be published on two government-owned websites: the Gazette and the Insolvency Register. 

However, unless your case is already high-profile, then it’s unlikely that the information will be published in your local papers. 

So, people can search for the details of your bankruptcy and this information will be available for them to view, but they’d already have to know about your bankruptcy to do this. 

2. You always lose your job if you file for bankruptcy

Are you wondering whether you should file for bankruptcy if you have a job? You may be concerned that your job could be affected. 

Well, the impact bankruptcy has on your job does depend on the type of job that you have and in which sector you work. 

For example, if you work in a bank or for the police, then your bankruptcy could affect your position. You might not necessarily lose your job, but the duties you usually perform may be changed. 

However, in most cases, you are not legally obliged to share your bankruptcy with your employer. Ensure that you read your contract thoroughly to understand the terms set out by your employer. If you’re still unsure after checking your contract, then speak with your employer. 

Your employer must treat you fairly. If they decide to dismiss you, then seek external advice to ensure that your employer has treated you fairly and to find out whether you can challenge the dismissal. 

Empty boardroom

3. You will lose all of your assets 

A lot of people tend to think that once a person goes bankrupt they will lose everything. This isn’t true.

If you go bankrupt, then certain items will be excluded from the assets that are sold to pay off your debt. 

For example, any items that you need to be able to work, such as books, equipment, or even a vehicle, will not be taken from you. These items are known as ‘tools of the trade’. 

Additionally, you will be able to keep any items that are necessary for you to function normally, such as clothes, furniture, kitchen appliances, and so on.

Pound notes

4. I’ll never be able to get credit again 

You may have limited access to credit options for up to ten years after your bankruptcy has ended, or for as long as the bankruptcy stays on your credit record, which is usually for six years.

However, if you actively try to manage your credit report, then you can work at increasing your credit score. 

For example, making all of your payments on time, taking out small loans and managing these well, and making sure you’re on the electoral register are all factors that can help to increase your credit score. 

Additionally, you can do all of the above even while the bankruptcy is on your credit report. 

5. Bankruptcy gets rid of every type of debt 

Most types of debt are covered by Bankruptcy and you will be released from them when you are discharged. These include debts such as unsecured loans, council tax arrears, utility debt, However there are some debts that are not included within a bankruptcy that you are still responsible for paying. These include:

  • Debts gained by fraud
  • Money owed under family proceedings (maintenance and lump sum settlements)
  • Damages payable to anyone for personal injuries
  • Student loans
  • Court fines
  • Debts created after the bankruptcy order

We hope that this blog has helped you to decide whether bankruptcy is the right financial solution for you. 

But if you wish to know more about bankruptcy, then Swift Debt Help can offer some further bankruptcy advice.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

money after payday loan

What To Do If You Can’t Afford Your Payday Loan

Written by Alex Swindells on . Posted in Bankruptcy, Debt help, Uncategorized.

A payday loan is usually a small amount of money that a person can borrow from a lender on a short-term basis. Since people who require a payday loan typically have bad credit, the interest rates are usually high. This can make it difficult for borrowers to pay the lender back. If you’re in this situation, there are steps that you can take and various debt solutions available which can help you out of your financial situation.

Before being accepted for a Payday loan, the lender should consider whether you’ll be able to pay it back. They’ll take into account your incomings and expenditures; however, they can’t advise you whether a Payday loan is the right debt solution for you.

There are debt solutions that may be more financially practical which we’ll provide details on.

However, if you’ve already borrowed money from a payday lender and are struggling to repay them, then consider the below steps:

  • Contact your lender and explain your situation. They are required to advise you on where to seek independent debt advice. They may be able to temporarily freeze any interest as well as accept smaller repayments. 
  • If you’re certain that you’re unable to make payment you could consider cancelling your direct debit so that no further payment can be taken. Before you do this, assess the risks; get in touch with your lender to let them know that you’ll be cancelling. Also, find out if there’d be any cancellation charges. If you’d still like to cancel any further payments being taken, inform your lender of your decision.
  • Keep a record of all conversations you have with the lender regarding your payday loan. A paper trail may come in handy should you ever need it in the future for evidence purposes.
  • If your lender offers to roll your loan over to the next month do not accept it. There will be extra charges to rolling your loan over which will add to your already outstanding debt.

If you think that your financial problems are long-term, then consider the various debt solutions that are available to help you with your payday loan and other unsecured creditors.

Debt Solutions

The debt solutions that may be available to you if you’re struggling to repay a payday loan include the following:

1) Individual Voluntary Arrangement

An IVA (Individual Voluntary Arrangement) is a legally binding agreement that can be arranged by an Insolvency Practitioner to help you repay your creditors in an affordable way over a set period of time. 

Before the payment plan is arranged and put forward to your creditors, your income and expenditure will be assessed by your IP. This is to ensure that you have enough money each month to pay for necessities, such as your rent/mortgage, bills, and food. 

Once an affordable amount for the payment plan is decided, and if it’s accepted by your creditors, then you’ll have to pay the agreed amount each month and stick to the agreed terms.

2) Debt Relief Order

A Debt Relief Order (DRO) is ideal if you have limited assets. This debt solution lasts twelve months and if your situation hasn’t improved in this time, then any remaining debt will be cleared. 

Once your DRO is in place, your lender will not be able to take any legal action against you.

To be considered for a Debt Relief Order, you must meet certain criteria, such as your debts not exceeding £30,000. Additionally, you must have resided in England, Wales or Northern Ireland. Also, your surplus income must not exceed £75 per month. If you own a property, you will not be eligible to apply for a DRO. You must also pay an upfront fee of £90.

3) Debt Management Plan

A debt management plan is ideal for someone who is struggling with non-priority debts. This includes credit card debt and unsecured loans, such as a payday loan. 

A DMP is an informal arrangement between you and your lender where a payment plan is set up based on what you can realistically afford. They are relatively easy to arrange; a third-party company will set up the plan and pay any money owed by you to your lender. 

It is worth mentioning that if your lender decides they are no longer happy with the informal arrangement, then they could still take legal action against you.

4) Bankruptcy

If you’ve explored all other avenues and failed to find a solution to pay back your payday lender, then bankruptcy may be an option for you to obtain a clean slate. 

You can file for bankruptcy yourself. When applying, you’ll need to pay £680 to the Insolvency Service. 

Once you’re declared bankrupt, creditors can no longer take legal action against you. However, if you do have any assets, then these can be sold to pay off your debt. 

Your bankruptcy will become public information, and it will remain on your credit report for six years.

Additionally, there are bankruptcy restrictions that you’ll have to abide by, but you are usually released from these after twelve months.

If you are considering entering into a debt solution and want to learn more, then get in touch for further advice. Alternatively, we have several guides and articles available online with more information.

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Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

empty wallet from effects of debt

4 Alternative Solutions If Your IVA is Rejected

Written by Alex Swindells on . Posted in Bankruptcy, Debt help, IVA.

An Individual Voluntary Arrangement, commonly known as an IVA, is a legally binding agreement between you and your creditors that helps you pay off your debt in an affordable way. 

An Insolvency Practitioner (IP) will assess your income and expenditure to determine how much you can afford to pay. Your IP will then put a repayment plan forward to your creditors, detailing why you’ll be paying the amount suggested. It is at this point that your IVA can be rejected by your creditors. 

If your IVA is rejected, this does not stop your IP putting forward another repayment plan to your creditors. However, if your IVA is rejected again, or if you have come to the conclusion that an IVA debt solution isn’t right for you, then it should be a comfort to know that there are other options available which could help you in your financial situation. 

We have put together some of the pros and cons of debt consolidation, bankruptcy, a debt management plan, and a debt relief order, to hopefully help you decide on the best option for you.

1) Debt Consolidation Loan

Debt consolidation is a term used when you have several debts which you decide to combine into one loan. This can be done by taking out a new loan in order to pay off your original loans. There are a few pros and cons to debt consolidation. We have listed some of these below.

Pros:

  • All of your debts will be in one place.
  • Once the original loans are paid off in full, you will no longer be threatened with legal action by the initial creditors. 
  • The debt of your new loan can be repaid through monthly installments. As It’s only one loan that you’re repaying, the interest rates can be much lower, making it more affordable.

Cons:

  • If you have poor credit, then it’s unlikely that you’ll be approved for a new and bigger loan. 
  • If you are approved, then the interest rate could still be high, although you’ll only be paying for one loan.
  • There may be extra costs involved so it is important that you seek impartial advice.

 

2) Debt Management Plan

A debt management plan is an informal arrangement between you and your creditors where you use a third-party company to set up the plan and distribute money to them. As with debt consolidation, there are a few pros and cons to a debt management plan and we have listed some of these below.

Pros:

  • It can be relatively easy to arrange.
  • You can make one regular monthly payment. 
  • You pay back your debt in full, but at an affordable rate for you through reduced monthly payments.

Cons:

  • Your debts must be paid in full.
  • If your creditors decide they are no longer happy with the informal arrangement that you agreed upon, then they could still take legal action against you.
  • It could take longer for you to be debt-free than other formal debt solutions.

3) Bankruptcy Pros and Cons

Bankruptcy is a legal status which allows you to obtain a clean slate. If you owe less than £30,000, then you might be able to get a debt relief order (see more on this below). But in terms of bankruptcy, there are a few pros and cons to consider. We have listed some of these below.

Pros:

  • Most types of debt can be written off if you cannot pay them.
  • Once declared bankrupt, creditors can no longer take legal action against you. 
  • In most cases you will be discharged from Bankruptcy after 12 months.

Cons:

  • Some of your assets may be taken from you and divided equally to pay off your creditors.
  • Your bankruptcy is publicly available information. Details will be published in the London Gazette and on the Insolvency Register.
  • If you have a business, this can be taken from you or sold.

4) Debt Relief Order Pros and Cons

A Debt Relief Order (DRO) is an alternative to bankruptcy if you have limited assets and affordability. There are a few pros and cons to a DRO and we have listed some of these below.

Pros:

  • Any future interest and charges will be frozen on any debt you owe. 
  • Your creditors will no longer be able to take legal action against you.
  • Your DRO will only last twelve months after which any debts will be written off.

Cons:

  • To be considered for a DRO, you must meet certain criteria, such as your debts must not exceed £30,000 and you must reside in England, Wales or Northern Ireland. Also, your surplus income must not exceed £90 per month.
  • Homeowners are not allowed to apply for a DRO.
  • Your DRO will go public, appearing on the public register.


Now that we have detailed some of the pros and cons to various debt solutions, you may find it easier to decide which option will suit you best. However, if you are still in need of IVA debt help, then contact us today.

Request a Debt Assessment

May not be suitable in all circumstances, Fees may apply, your credit rating may be affected.

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Woman at computer on tablet

5 Things To Know Before Declaring Bankruptcy

Written by Alex Swindells on . Posted in Bankruptcy, Debt help.

Declaring bankruptcy may be your only option if you have mounting debts that you are unable to pay. However, bankruptcy is not something you should rush into because it has long term effects on your life and your finances. Here are five things you should know before declaring bankruptcy.

1. Bankruptcy can have an impact on your assets

Hand drawing of man in shirt and tie losing his assets to bankruptcy

When you declare bankruptcy, you are required to make a reasonable effort to pay back your debts, and this often includes using your assets. Things that are considered essentials, like clothes, furniture, and cooking appliances are protected. However, other belongings will be passed on to the Official Receiver, the person that deals with your bankruptcy. These will then be sold to raise money to pay your debts. 

Items that you are allowed to keep include:

  • Clothes 
  • Furniture
  • Household appliances
  • Tools required for your job
  • A car that you need for work or other basic needs (if you are disabled, for example)

There are some exemptions and if certain assets on this list are valued very highly, they can still be sold. For example, you may be forced to sell your car and you will be given £1,250 to buy a cheaper replacement, with the rest of the money being paid towards your debts.

Jointly owned assets can also be affected. If they are sold, the money will be split between the Official Receiver and the person that has a shared interest in the asset.

Depending on your situation, you may have to move home when you declare bankruptcy. If you rent your home, you will not be affected and your landlord will not be informed. But if you own your home, you may be required to sell it to raise money to pay your debts. In some cases, you can prevent this. 

The official receiver has three years to decide what to do with your home. If they have not taken steps to sell it in that time, your interest in it is restored and you can keep your home.

It is important that you consider how your assets will be impacted before you declare bankruptcy.

2. If you own a business, bankruptcy will have an impact

Drawing of chart a declining chart with an arrow pointing downwards

When you declare bankruptcy, there are specific rules related to the running of a business. For the 12-month period of your bankruptcy, you are forbidden from acting as the director of a limited company or managing it in any way without the permission of the court. The company itself can continue to operate but you will need to appoint somebody else to manage it for you. 

If you are self-employed and registered as a sole trader, the rules are different. You will be able to continue operating as normal, but if you run a business under a name that’s different to the one in which you were made bankrupt, you must tell everyone you do business with the name under which you were made bankrupt. 

Bankruptcy will also be recorded on your credit reports for six years. This can seriously impact your ability to get credit in the future, which can be a big problem for businesses.

Business owners might want to explore other options like an Individual Voluntary Arrangement to avoid the restrictions on their ability to run their company.

3. Your bank accounts could be frozen

Young woman feeling displeased about debt on her credit card while checking bank account over laptop at home.

The Official Receiver takes control of all of your assets, including your bank account, when you declare bankruptcy. This often means that your bank accounts are frozen and you cannot withdraw any money. If you have money in your account that is required to meet your essential living costs, the Official Receiver will arrange with the bank to release those funds to you. The bank will then decide if you can continue using your account.

4. Bankruptcy doesn’t cover all of your debts

Pound coins stacked on top of each other on a table

Writing off debt is one of the major benefits of bankruptcy but not all debts are covered. You must understand exactly which debts are not covered because you will still be liable for them, even if you file for bankruptcy. Debts not covered include: 

  • Secured debts
  • Child maintenance debts
  • Student loans
  • Court fines 

5. Take the right steps before declaring bankruptcy

Person wearing running shoes taking steps up the stairs

There are some key steps you must take when declaring bankruptcy to minimise the impact.

Ensure bankruptcy is the right debt solution for you

Bankruptcy is not always the right debt management solution. Look into options such as Debt Management Plans (DMP), Debt Relief Orders (DRO) or Individual Voluntary Arrangements (IVA) before declaring bankruptcy. You may be able to limit the impact on your credit reports and avoid financial restrictions by finding a different debt solution.

Apply for bankruptcy

The next step is to fill out the necessary paperwork and pay the fee of £680. This can be paid in instalments, if necessary, with a minimum payment of £5. However a bankruptcy order will not be granted until the fee is paid. You will find the forms on the gov.uk website.

Set a budget from your living costs

As part of your bankruptcy application you will need to write a budget based on your essential expenses. When you declare bankruptcy, you will not be permitted to spend anything else as all additional money will go towards your debts.

Cooperate with the official receiver

The Official Receiver is the person that manages your bankruptcy. They will contact you within two weeks of your application to discuss your bankruptcy. They also take control of your assets. You need to work with them while they distribute your money and assets to pay off a portion of your debts.

Pay back your debts and discharge from bankruptcy

Now that everything is in place, you may need to continue paying towards your debts for up to 3 years – this is dependent upon your circumstances and your disposable income after meeting your essential outgoings. As long as you cooperate with the Official Receiver and meet all of your obligations, you should be discharged from bankruptcy after 12 months. 

Declaring bankruptcy may be the solution to your debt problems but it is not always the only option. If you need advice about managing your debts, fill out the contact form to get in touch with Swift Debt Help today. We can talk through your different options and help you regain your financial freedom.

Request a Debt Assessment

May not be suitable in all circumstances, Fees may apply, your credit rating may be affected.

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.