Generally speaking anyone can go bankrupt. But whether it is right for you will depend on a number of factors.

Included in this article:

• Should you go Bankrupt?
• Which jobs are at risk if you go Bankrupt?
• Can you go Bankrupt if you are on Benefits?
• Bankruptcy when you are Retired

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Should you go Bankrupt?

When deciding if bankruptcy is right for you the first thing you need to consider is how much you owe. If it is less than £1000 the solution will probably be unsuitable due to the application fee.

If you owe more than £1000 but your total debt is less than £20,000 it might be worth considering a Debt Relief Order (DRO). If you are not a home owner and cannot afford to pay anything towards your debts this is a much cheaper alternative.

Should you avoid Bankruptcy if you are a home owner? This may be the case if there is a lot of equity in your property. However where there is little or none it may be a sensible solution.

You can go Bankrupt if you have little or no income. You will not be required to make any further payments towards your unsecured debts unless you can afford to do so.

Which Jobs are at risk if you go Bankrupt?

Most jobs are not affected by Bankruptcy. Your employer is not told and you should be able to continue working as normal. However it can be an issue for some forms of employment.

You cannot act as a company director or be involved in the management of a limited company while bankrupt. If you are a director you would have to give up this position for the duration of your bankruptcy.

Most financial services jobs are unaffected. However there are restrictions on some positions that involve the handling of money or where you are required to have a clean credit rating. If in doubt check your contract.

While bankrupt you cannot practise as a Chartered Accountant, Solicitor, Insolvency Practitioner or the Trustee of a Charity. In addition you will not be allowed to hold an HGV Operator’s license or license to sell alcohol.

Can you go Bankrupt if you are on Benefits?

Bankruptcy is not restricted to people who are in work. If your income is made up either partly or entirely of benefits there is nothing to stop you using this debt solution.

In fact Bankruptcy could be a great option for you. If your income is low you may not have to make any further payments towards your debts at all.

One of the main problems you could face is the application fee. There is no reduction if you are on a low income. You will have to either borrow the money required, save it or sell something you own to raise the cash.

Can you go Bankrupt if you are Retired?

There is nothing to stop you going bankrupt if you are retired or are shortly due to retire. However if part or all of your income comes from a pension you still have to declare this during your application.

If you have surplus income you will have to make payments towards your debts in the same way as if you were working. You are not exempt from this because you are retired.

If you retire while you are bankrupt you must inform the Official Receiver of the change in your circumstances. They will normally ask you to submit a new income and expenses budget based on your new financial circumstances.

You cannot be forced to draw cash from your pension to help pay your debts. However if you do so by choice this will be treated as a windfall and will have to be handed to the Official Receiver.