Bankruptcy may not always be the best option for you. There are many alternatives to bankruptcy which allow you to pay off your debts. Ultimately your final decision will depend on the amount of money and assets you have. Please take a look at our debt solutions page for an overview of all your options. This article answers the question: Is bankruptcy the best option for me?
Please note, that in certain circumstances you can cancel your bankruptcy.
When is bankruptcy a good option
Whether bankruptcy is your best option depends on the amount of unsecured debt you have, your assets and your future prospects. Here are a couple of situations when bankruptcy is a good option for you:
- You want to clear all your debts
- You want to stop collection calls
- You want to save your credit score
- You might get better access to credit
- You don’t have many belongings
- You have little/none equity in your house
Out of all the debt solutions, declaring bankrupt should be the last resort, as the consequences of going bankrupt are highly serious. As mentioned many times before, make sure you get free debt advice to help make the right decision.
Please note, your benefits may be impacted by going bankrupt.
When is bankruptcy not a good option
Declaring bankrupt is not for everyone, sometimes it may be better to consider other options like a debt relief order (DRO). Bankruptcy is not a good option for you, if you:
- You owe less than £20,000
- Your assets are worth no more than £1000 in total
- You work in certain occupations
- You don’t want to go public
- Have excessive savings
- You really want to keep your home/property
- Your jointly owned property has equity in it
- Your financial situation is likely to change in the future
Please note bankruptcy won’t deal with a charging order while it is secured on a property. Bankruptcy also comes with a load of restrictions which you legally must follow, such as not be able to borrow more than £500. More information on the Gov website.
Bankruptcy can place some restrictions on moving abroad. Please read our article on bankruptcy and moving abroad.
Options other than bankruptcy
There are other options available, as well as declaring bankruptcy. Which one is best will depend on your personal circumstances. Below are some options for dealing with your debt, other than bankruptcy:
- Debt Relief Order (DRO)
- Debt Management Plan (DMP)
- Administration Order
- Individual Voluntary Arrangement (IVA)
- Debt Consolidation Loan
- Debt Arrangement Scheme (Scotland only)
Need more help?
If you contact a free debt adviser they will be able to highlight any good or bad points from the debt solutions available to you, this makes sure that you both choose the right course of action for yourself and your family.