Going Bankrupt in the UK often means debt in your local county is written off. However you need to be resident before you can apply.
Jump to article content:
- Why is Bankruptcy in the UK attractive?
- How to go Bankrupt if you are not currently resident
- What proof will you need of your UK residency?
- Moving back home after you are Bankrupt
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Why is Bankruptcy in the UK attractive?
If you go bankrupt in the UK the process will normally only last for 1 year. If you are required to make payments towards your debts these will only last 3 years. After that any outstanding debt is written off.
Unsecured debt you owe in other countries is normally included. Creditors in other EU countries are always bound in. This is also often the case for debts owed outside the EU in countries such as Canada.
Section 426 of the Insolvency Act and the United Nations Commission on International Trade Law (UNCITRAL) provides for Cross Court Co-Operation between the UK and many countries outside the EU.
As long as you are living in England & Wales you do not have to remain in the UK after you go bankrupt. You can move to any other country without issue. You do however have to remain in contact with the Official Receiver.
How to go Bankrupt if you are not currently Resident
You do not have to be a British National to go Bankrupt in the UK. However you have to be resident here. The law requires that the UK must be your Centre of Main Interest (COMI).
In other words if you want to go bankrupt in the UK you have to move here. Ideally you should settle in either England or Wales. In Scotland and Northern Ireland the process of going Bankrupt is different and there is restriction on your movement afterwards.
After you move you cannot make your bankruptcy application straight away. The rules state that you first have to live here for the greater part of the last 6 months. In theory this is just 3 months and 1 day. However 6-12 months is a sensible minimum.
If you used to live in the UK but now live in a non EU country you can still go bankrupt for 3 years from the date you left.
What proof will you need of your UK Residency?
When you move to the UK you will need to apply for a National Insurance number. Given your residency is legal this is not difficult. You will have to provide this number when submitting your bankruptcy application.
There are various things that will help you prove that you are resident in the UK. You will need to open and use a UK bank account. You should also take a mobile phone on contract.
It is not necessary to be employed. You can go bankrupt if you are being supported by family and friends. You could even work abroad. However your income must be paid into your UK bank account and your residential address must be the UK.
It is useful if you have a rent agreement and are registered to pay Council Tax. However this is not essential.
Moving back home after you go Bankrupt in the UK
If you are living in England or Wales is that there is no restriction of movement after you have been declared bankrupt. The Law is simply concerned with where you live before the event.
As such you can move back to your home country the day after you declare yourself bankrupt if you wish. You simply need to remain in contact with the Official Receiver in the UK
While you remain bankrupt need to keep the Official Receiver informed of any changes to your financial situation. The payments you make towards your debt may rise if your income increases.
Discharge from bankruptcy will usually be automatic after 12 months whether you have chosen to move back to your home county before then or not.
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