Can I go Bankrupt if I am on Benefits?
If you receive benefits Bankruptcy may be an ideal debt solution. You may not have to make any further payments towards your debts.
Jump to article contents:
- Is it possible to go Bankrupt if you are on Benefits?
- Do you have to pay the Appliction Fee?
- Will you have to make payments towards your Debts?
- How to pay the Bankruptcy fee while on Benefits
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Is it possible to go Bankrupt if you are on Benefits?
If you are receiving benefits but are struggling with debt you can go Bankrupt. There is nothing to stop you using this solution if you feel it is right for you.
Bankruptcy may actually be a very sensible option for you. The fact that you receive benefits may mean that you are on a low income. As such other solutions which require you to make payments towards your debt each month may not be affordable.
If you go Bankrupt and cannot afford to make payments towards your debt you will pay nothing more. The money you owe is likely to be written off after 12 months.
Do you have to pay the Bankruptcy Application Fee if you receive Benefits?
If you want to go Bankrupt you will have to pay a Fee. This is the case whether you are receiving benefits or not. Despite the fact that you probably have a low income you will not be eligible for any reduction.
In England & Wales the bankruptcy application process moved on line on the 6th April 2016. The fact that you no longer have to visit the Court is seen as a positive step by many.
However the downside is that there is no longer any option to waive part of the fee for those on a low income.
It is possible to pay the bankruptcy application fee in instalments. However you will not be able to submit your application until it is paid in full.
Will you have to make payments towards your Debts?
When you go bankrupt you have to declare all of your income including any benefits. The Official Receiver will then calculate if you can afford to pay towards your debts.
If your only income comes from benefits it is very unlikely you will have to pay anything. This is because you are unlikely to have any surplus income.
Your benefits are set so that you can pay for your reasonable living expenses only. There should be no surplus which can be used to pay for anything else.
You may have other forms of income as well as benefits. In these circumstances your total income is taken into account. If based on this total you can afford to make a payment towards your debts you will have to do so.
How to pay the Bankruptcy Fee if you are on Benefits
Finding the money to pay the Bankruptcy Fee will certainly not be easy of you are on benefits and have a low income. However there are some things you can consider which might make this easier.
The first is to borrow the money you need. Perhaps a friend or family member can lend you the money. If not you could borrow from an available credit card or overdraft facility. You could also consider borrowing from a Payday lender.
If you borrow money to pay for your Bankruptcy this becomes a debt which is then included in the procedure. If you want to repay this money you will normally have to wait until after you are discharged.
If borrowing is not an option then you will have to save the money you need. A good way to do this is to stop paying the debts which will be included in your Bankruptcy. Instead you put the money aside and save it towards the fee.
When you stop paying your creditors will probably start to hassle you and threaten Court action. As soon as you go Bankrupt these actions will stop. Also any legal action that may have been taken against you will be overturned (with the exception of a charging order against your house).
Saving for your Bankruptcy fee will become easier from the 6th April 2016. From this date you will be able to pay in instalments as and when you have spare cash.
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