If I go bankrupt what living expenses will I be allowed?

If you go bankrupt, you will be expected to keep to a sensible living expenditure budget but  you will not be left to survive on the breadline. We investigate what living expenses are considered reasonable for a bankrupt person.

One of the misconceptions surrounding Bankruptcy is that all of your income will be taken from you each month and you will be left with nothing to live on. This is not the case. In fact the reverse is true. If you need all of your income for reasonable living expenses then you will actually not be asked to pay anything to your creditors.

You are allowed to include all reasonable living expenses

During the bankruptcy application process you will have to submit a living expenditure budget which you believe you need to live on. It is very important to include a comprehensive but reasonable budget so that you do not find yourself struggling while you are bankrupt.

Some of the expenses you have are fixed such as your mortgage, rent and council tax. However, others such as food and petrol are variable and will depend on the size of your family and daily needs.

Can higher expenditures be included?

If you stick within the upper and lower limits suggested by our living expenses guide you can be fairly confident that your budget will be allowed by the official receiver

However if you have a legitimate reason why you spend more each month than the guidelines permit then you should not be scared of including a higher figure. However you must be prepared to justify this to the official receiver (OR) or it will not be allowed.

For example, if you drive more than an average amount each day to get to work, your monthly expenditure on petrol is likely to be higher than the guidelines. This will be acceptable because it is reasonable and justifiable.

BMD Tip: If you believe that you need to spend more on food each month because you have more expensive tastes, this is likely to be rejected by the OR. If this happens you will simply be asked to reduce this area of your budget and pay more each month to your creditors.

Bankruptcy is a serious matter

Bankruptcy is a serious matter and should not be undertaken lightly. However, declaring yourself bankrupt does not mean that you will be left with nothing to live on.

You will be given the opportunity to say what you need to spend each month and you need to take great care to ensure that you complete this section of the bankruptcy application form properly.

As long as your budget is reasonable you will be allowed to keep this money even if it means that there is nothing left to pay your creditors.

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