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Can I go Bankrupt if I am on Benefits?

Go Bankrupt on Benefits If you receive benefits Bankruptcy may be an ideal debt solution. You will usually be bankrupt for just 12 months. In addition you may not have to make any further payments towards your debts.

  • 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

Want help to go bankrupt? Give us a call on 0800 044 3194 or complete the form below to speak to one of our experts

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 of the fee.

**Update** From the 6th April 2016 the process for going Bankrupt will change. You will no longer have to present your application at your local Court. Instead you will be able to apply on-line.

The fact that you no longer have to visit the Court will be seen as a positive step by many. However the downside is that there will no longer any option to waive part of the fee for those on a low income.

After the 6th April you will be able to pay your Bankruptcy Fee in instalments. However the full fee will have to be paid by everyone.

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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6 thoughts on “Can I go Bankrupt if I am on Benefits?

  1. Mrs Lynda nettleship says:

    On benefit ESA , had to move out of my house which I was buying and move to private rented ,18 month been on sale and getting into arrears can’t pay anything need help

    1. Hi Lynda

      If you have debts that you cannot afford including a possible mortgage shortfall after the repossession of your property then bankruptcy could well be a sensible option for resolving the problem. You can certainly go bankrupt if you are on benefits as the article above explains. If you need more help or advice about how to best deal with your debts please do not hesitate to contact me on 0800 044 3194.

  2. Charlotte Read says:

    I have debts of at least £4000 approx I’m a single mum of 2 on benefits and struggling to keep up repayments and pay my creditors off £2000 is just electric which by time I’ve done food rent and council tax I can’t afford to pay my electric really stuck as too if I go bankrupt will I still be entitled to my benefits?

    1. Hi Charlotte. Bankruptcy does not affect your entitlement to benefits. If you were to go bankrupt you would still qualify for your benefits and they would still be paid to you as normal.

      Given your debt is less than £4000 I also recommend that you consider a Debt Relief Order. This solution works in the same way as bankruptcy and gives exactly the same outcome. However it costs much less to implement (£90 compared to £680 for bankruptcy. If you are living in rented accommodation then I would thenk that you will almost certainly qualify. You can find out more info here: What is a Debt Relief Order

  3. kay moffett says:

    Hi I am a single mother of 5 kids on benefits and have been Hinding from my debts but it’s all getting to much now. I cant even remember who I have debts to and how much. I need help help please

    1. Hi Kay,

      I am sure that there is a sensible solution for your debt problem. If you owe less than £20,000 and are living in rented accommodation you may qualify for a Debt Relief Order. This will only cost £90 to implement and then you get the same benefits as Bankruptcy. If you owe more than £20,000 then bankruptcy might be the best way forward. Please do not hesitate to give us a call and we will be happy to give you more advice (0800 044 3194).

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