Money Advice, Debt Advice & Debt Help
Will my creditors make me Bankrupt?

Will my creditors make me Bankrupt?

For many people going Bankrupt is not as bad as it sounds. In fact depending on your circumstances it may be the best way to resolve your debt problems. Having said that one of the main issues is the up front cost. If you decide to go through the process yourself you will have to pay a court fee. One of the things that you might consider to avoid paying this fee is to simply wait for your creditors to make you Bankrupt.

Will your creditors make you Bankrupt?

It is actually highly unlikely that your creditors will make you Bankrupt. There are two main reasons for this. The first is that it will normally cost them £2500 – £3000. This includes the cost of using a solicitor. Secondly even if they do make you bankrupt it is unlikely that they will recover the debt you owe them unless you have significant personal assets such as a property with considerable equity in it.

Most commercial creditors will prefer to use alternative options for collecting their debt. The general exception to this is if you owe debt to HMRC. If you persistently do not pay tax due or other money owed to HMRC they may well choose to make you bankrupt. They do not necessarily hope to recover their debt but rather stop the situation becoming any worse.

**Update** Not every creditor can make you bankruptcy. Creditors are only allowed to do so if you owe them at least £5000. If you owe a creditor less than £5000 they will not be allowed to petition for your Bankruptcy. This amount was increased from £750 on 1st October 2015.

What debt collection methods will your creditors use?

The associated cost and potential lack of return will mean that most commercial creditors will avoid making you Bankrupt. As such it is far more likely that they will use other debt enforcement methods against you. The first will normally be applying for a County Court Judgement (CCJ).

If a CCJ is issued but remains unpaid this then allows a creditor to take further action against you. They can then apply for an attachment of earnings which would mean payments can be taken directly from your wages.

In addition if you are a home owner they can apply for a charging order which would secure the debt against your property.

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