How do I know if I am in a position to file for bankruptcy?

Times have, of course, changed dramatically since the days of Fleet Street debtor’s jail, albeit safe to say London’s traditional newspaper HQ still has just as many unscrupulous types hanging around. Regardless of progress in terms of financial support, though, it’s safe to say when loans and credit cards begin to spiral out of control there are few more stressful scenarios to deal with in life.

It’s no news that over recent year the UK has seen a spike in insolvency cases. An era of austerity, it seems as though most of us have serious money worries, save for the old privileged few. But, contrary to popular misconceptions, there are several courses of action, with varying repercussions on your credit rating, which could help- even when the situation looks particularly dire.

In short then, bankruptcy isn’t the only way to try and escape crippling accounts with creditors you have seemingly no chance of settling without taking drastic action. More so, it’s by far the most extreme option out there, and as such even if you do qualify for proceedings it’s essential to get some professional advice, as there may be a far better alternative out there that will impact less on your financial future.

At the most basic level, knowing when you are in a position to file for bankruptcy is relatively simple. There will be little to no disposable income available to pay off unsecured debts, and one or more creditors will be owed £750 or more in order for a petition to be made. Further to this, the total value of assets- e.g. savings and property- must be less than the total amount owed out. Put simply, even if you sold everything there would still be balances outstanding that need to be addressed.

In addition to having genuine debt problems that require urgent action you will also need to be in a position to pay the charges associated with your petition. For applications in England and Wales a total of £700 in fees, split between the court and official receiver, will be due, in Northern Ireland the same costs are set at £460, with an additional £7 for solicitor’s fees. It’s also worth noting that if you’re on benefits, have been made redundant, or have a particularly low income there may be entitlement to a reduction, which is judged on a case-by-case basis.

Irrespective of circumstance the official receiver’s fee will always have to be paid in full, and the charges for filing a petition at court are non-refundable. This means even if you aren’t declared bankrupt the costs will remain the same, all of which are due prior to any judgement being made as to your case. Evidence, if it were needed, that you must fully consider the proverbial fine print before making any decision to proceed with an application, in turn accentuating the need to contact a debt advice organisation or charity.

Money Helper (formerly The Money Advice Service) is a free service set up by the Government to help people make the most of their money. If you would like to learn more click here. is not regulated and is for fact-finding only. We can help assess your circumstances and point you to someone who can provide available options that suit your debt criteria.

If an individual meets the required criteria for an IVA based on our packaged case, this will be passed to one of our partnering Insolvency Practitioners to get direct advice. If the individual does not meet the criteria for an IVA, The Insolvency practitioner is able to provide contact information for other third-party organisations that offer advice on other available debt solutions. For full details view our Privacy Policy.

If you decide that an IVA (Individual Voluntary Agreement) is not the best option for you after we have prepared the necessary information, you can opt out of the process and have all of your details removed. We receive a fee from the third party that we refer you to for introducing you and for the work we have completed. However, you will not be responsible for paying this fee. The third party will contact you directly to continue the process of your IVA application or to explore other solutions, but only with your permission after we have introduced you.