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Can I go Bankrupt if I am on Benefits?
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Can I go Bankrupt if I am on Benefits?

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.

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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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50 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).

  4. Tracy says:

    I have just lost my home saving to go bankrupt but just moved in with my partner he is claiming tax credits for both of us,will he be effected when I go bankrupt don’t want him or his address to be involved

    1. Hi Tracey,

      Your partner is not affected in any way if you go bankrupt. You will have to confirm his income (including benefit income) on your application form but he will not be liable to make any payments towards your debts. For more info about how your partner is affected if you go bankrupt have a look here: My Partner and Bankruptcy

  5. Wayne Holmes says:

    I have got debts which I can’t pay and I can’t remember who I owe money too but would like to apply for bankruptcy but am on benefits

    1. Hi Wayne,

      There is nothing to stop you applying for bankrutpcy if you are on benefits. You are just as eligable to apply as anyone else. In addition one of the advantages of bankruptcy is that you do not have to remember who you owe money to. You should try your best to list the people you do know of on your application. However if you forget some they are still included and these balances also written off. If any of these were then to contact you after you are bankrupt you simply inform the Official Receiver and they will deal with them for you.

  6. breda quinn says:

    If I apply for bankruptsy can i use another name that i have been called and have debts in this name also

    1. Hi Brenda

      If you have debts in another name such as your maiden name there is no problem with this. They can be included in the same bankruptcy application. When you complete the application form you will be asked whether you have had debts in any other name and if so you can include that name as well. All the debts in both your names will be included.

  7. Sarah says:

    Hi, I am self employed making very little sometimes nothing, claim working tax Credits and child tax Credits. If I go bankrupt will my child maintenance from her father count as income to pay debts off? Thanks

    1. Hi Sarah

      I can confirm that Child Maintenance payments are considered as part of your income. As such if you have any disposable income the Official Receiver is likely to require you to pay this towards your debts for 3 years yes. This rule is confirmed in the Insolvency Service Technical Manual Section 31.7.75.

  8. Daryl says:

    Hi,
    When applying for Bankruptcy whilst on Benefits (ESA) does the EX160 form no longer apply? Is it no longer possible to get part of the fee waived? Will I have to pay the full fee of £680?
    Thanks.

    1. Hi Daryl

      In April 2016 the bankruptcy application process in England and Wales moved online. Given you no longer have to go to the Court there is no “Court Fee” to pay. The EX160 Court Fee Waiver application is therefore no longer applicable to the bankruptcy process. I am afriad everyone now has to pay the full £680 fee whether they are in receipe of benefits or not.

      If you are struggling to get the £680 together there are certain charitable trusts that may be able to help. You can find out more about this in the last section of this page: The cost of Bankruptcy

  9. Philip says:

    I have a debt of just under £2,000 which I can’t afford to pay back . I don’t claim any job seekers allowance or any other benefits and I’m not working as I look after my kids while my partner works part time. I don’t have any money at all. Don’t know how I can pay this debt off as my partner needs all her wage for living costs

    1. Hi Philip

      Your situation sounds similar to that of Charlotte Read above.

      Given you have debts of less than £20k and have little or no income I suggest you consider a Debt Relief Order (DRO). This solution gives you the same outcome as bankruptcy but only costs a one off payment of £90 to implement (compared to the £680 fee to go bankrupt). If you are not a home owner this solution is designed specifically for you.

      You can get a DRO by making an appointment with the debt counsellor at your local CAB (Citizens Advice) or by speaking to the Step Change debt charity.

  10. R cooper says:

    Hi thinking of going bankrupt and I know they will freeze my bank accounts. If this happens how do you get your housing benefit? Please help

    1. Hi there

      Maintaining a bank account when you are bankrupt is not as much of a problem as you might think. You are right if you have a current account the bank will normally freeze it a week to 10 days after you go bankrupt. However most banks will be happy to open a basic account for you which will remain open. You can have your benefits paid into that account.

      If you already have a basic account you do not need to worry. This will simply remain open. However if you owe money to your current bank I would advise opening a new basic account with a different bank. At present TSB seem to be very helpful in this regard. You can open your new account either before or after you go bankrupt it will make no difference.

  11. Donna says:

    Hello,

    I have just been hit with a 14,000 bill from a solicitors that I was using as a no win no fee personal accident claim. After 3.5 years, I was chatting to him and mentioned something that I know had disclosed to him prior.He denyed this, and said that I had signed my witnes statement to the contrary. I looked at it later, and the statement wasn’t there on the original.It had been added recently, and after a bombardment of emails and telephone calls, I just scanned through and signed missing the vital added- not by me, statement.

    I can’t possibly pay this back.I have other debts too.My income as a carer only comes to roughly 1000 a month. Is bankcruptcy an option for me. I actually feel sick thinking about it.

    1. Hi Donna

      Thank you for your call just now. I can confirm that if you owe a debt to a solicitor that you cannot pay this would certainly be included and written off if you went bankrupt. Any other unsecured debt in your name would also be included.

      Given you are not a home owner and do not own a car you have nothing to lose by going bankrupt. The only thing to note is that as you are employed if you have any surplus income you would be obliged to pay this towards your debts for 3 years.

      My first suggestion is that you go back to the solicitor in question and explain that if you cannot come to a sensible agreement you will have no choice than to go bankrupt. Perhaps offer him £500 for his time. If he will not budge and wants to press you for the full amount my advice would be not lose any more sleep over it. Just go bankrupt and have done with it.

  12. Fiona says:

    I am currently on a dmp and owe £3715. I do not work and am in receipt of housing benefit, council tax benefit and carers allowance. My 13 yr old son has sensory processing disorder and is on the waiting list for autism spectrum disorder.

    My dmp are wanting most of his dla to repay MY debt which I feel is unfair as the money is to pay for the things he needs. Would I be able to go bankrupt owing this amount of money?

    This is the first time in years I have had enough money to make sure he has the things he needs and enough for the extra petrol to take him the places he needs to go. If they take it we will be back to square one. Is bankruptcy an option for me? Many thanks Fiona

    1. Hi Fiona

      Firstly you do not have to make payments into your Debt Management Plan (DMP) from your son’s DLA payments. As you rightly say this money is to pay for his needs and not your debts. As such no DMP provider can force you to hand this money over.

      Having said that most DMP providers can only help manage a DMP on your behalf if you are able to make a minimum payment of at least £75-£100/mth. If you are unable to do this without using some of your son’s money this may be why you are being asked to hand some of it over.

      In terms of whether or not bankruptcy is an option for you if (as I assume) you are living in rented property the answer is yes. If you went bankrupt your debts would be taken away from you. Given your income is made up of just benefits it would be highly unlikely you would have to make any further payments towards them. After a year you would be discharged and the debt written off.

      Having said that the issue for you will be the up front bankruptcy fee. This has to be paid in full before you can apply. Given this I would recommend that you look into the option of a Debt Relief Order (DRO). This would give the same result as bankruptcy but given you qualify it would only cost £90 to implement. You should make an appointment with your local CAB to discuss this or speak to the Step Change Debt Charity.

      1. Fiona says:

        Hi James,

        Thank you so much for your reply. I forgot to add that I have a car on finance from First Response, if I took out a DRO would I be allowed to keep on paying for the car? Where I live I really need a car to get us anywhere.

        Kind regards
        Fiona

        1. Hi Fiona

          The fact that you own a car on finance may affect your ability to use a DRO. The issue is that to qualify for this solution the second hand value of your car must be no more than £1000 regardless of any outstanding finance. If the value is more then you would not qualify and you would need to consider the bankruptcy option.

          In terms of bankruptcy you are allowed to keep a car as long as its second hand value net of any outstanding finance is £1000 or less. In other words you are allowed to deduct the value of any outstanding finance before the final valuation is reached.

          For example: If the value of your car is £2500 and the outstanding finance is £2000 you do not qualify for a DRO because the value is more than £1000. However if you go bankrupt you could keep the car (as long as you continue paying for it) as the value net of outstanding finance is only £500.

          Note: Normally if you go bankrupt and have a car on finance the finance company will allow you to keep it as long as you maintain the payments. However you need to double check with them that they would be OK with it BEFORE you go bankrupt. If they say it is OK then the official receiver will normally have no issue with you maintaining the payments while you are bankrupt as long as they are not unreasonably high.

  13. Sam says:

    I am looking to go bankrupt, I have put it off thinking I can clear the debt owed, but now realise it’s just not possible. I receive child tax credit, housing benefit, child maintance, student finance, as well as income from casual employment which varies evwry mnth.I am classed as a full time student and single mum. What would be included as income?

    1. Hi Sam

      You will need to record all these forms of income on your bankruptcy application form (other than student finance which is not income). Having said that the Official receiver will not automatically take any of this money from you. They will want to look at all of your reasonable living expenses as well. They will only ask you to make a payment towards your debt if you have any disposable income (money left over after all your living expenses are covered).

      As I do not know anything about your expenses it is impossible to say whether you might have to make a payment or not. Having said that given the majority of your income is made up of benefits I would say that it would be fairly unlikely. A list of the allowances you can include in your budget can be found in our living expenses guide.

  14. Harry says:

    If I go bankrupt but am then paid back payments for a non income related benefit within the 12 months before I am discharged would the official receiver take this away from me?

    1. Hi Harry

      If you go bankrupt you have to declare any benefits that you receive. Generally speaking if your income is just made up of benefits you will not have to make any further monthly payments to your debt. This is because you are unlikely to have any disposable income. Your benefits are calculated to cover your personal needs not to fund extra expenses such as debt payments.

      However if before you are discharged you are paid a lump sum because you are owed back payments on your benefits the official receiver (OR) is likely to view this as a windfall. As such they may ask you to hand it over. That said if the lump sum received is relatively small you would probably be allowed to keep it.

  15. Michelle Fostet says:

    Hi, I owe 19800.00 in debts which i was paying through an iva. I then had to have emergency surgery and am now in disability benefits and esa. I contacted a non profit company to help me and they have suggested bankruptcy as the I was overpaid some benefits, which they are recouping monthly. This has taken me over 20,000, so a DRO is not an option now because of that!

    I have just been awarded back pay of 700.00 for PIP (disability). Do I need to declare this to the people who are going to arrange my Bankruptcy and if so, will they take it off me? I have been having money from family to help me whilst my benefits got sorted out and I would like to pay them back out of this backpay.

    1. Hi Michelle

      The first thought that springs to mind is the simplest thing would be to use the £700 you have received to pay your bankruptcy application fee.

      However if you have already made the payment I would not worry too much. The money you have received is relatively small. If it went into your bank account and you still have it you should declare it on your application form. However given your only income is benefits it seems to me that you need this money to help support your ongoing living expenses. As such I believe the OR will let you keep it.

      I suggest that you explain to the OR that you need the money to support your living expenses. If you say to them that you are going to use it to repay your family they might consider that it is surplus to your needs and demand that it is paid to them.

  16. Rachel says:

    I and my (under 16 yr old) daughter receive disability benefits. I also receive CTC, ESA and Child Benefit. My monthly income looks quite high on paper (2k ish) but my unsecured cc/catalogue debts are nearly up to 19k.

    I have disposable income of more than £50 and so I would not be eligible for a DRO but am considering bankruptcy as it’s all become too much. Some of my CC’s are high interest lenders (40% APR) and I’m paying more than my monthly min payment but I’m not getting anywhere with it at all and end up using the cards back up to my credit limit. I keep up with my repayments and have rarely missed them (may have a few defaults but am paying all debts).

    I have moved home last year from a property that was very low bills into a house that is high electric and costing a lot to heat, and even using the heating very little every day its costing around £50 per month. Ideally I need to keep the house warm as its affecting my disability but I can’t keep up with everything. I also recently ordered a new expensive mattress on my catalogue, as I need it for my back but I’m worried they might see this as fraud if I then go bankrupt! Any advice please? Silently panicking 🙁

    1. Hi Rachel

      Based on what you have said I assume that you and your daughter are living in rented accommodation? If so and your disposable income is greater than £50/mth then I agree bankruptcy does seem a sensible option for you.

      In terms of using your catalogue just before you go bankrupt this is not ideal. However if the expenditure was due to medical grounds (i.e. your back) and unavoidable I do not think the official receiver will hold it against you. Even if they frown upon it in reality there is little or nothing they can do about it. I do not believe there is any risk that you would be accused of fraud.

  17. Yasminn says:

    Dear James Falla,

    I was living in France for 20 years and I have France Passport 15 years. I came in UK July 2013 living permanently with my three children 14;11;07 years old.

    I just received HMRC letter that France authority demand £62000 unpaid council tax bill (mutual assistance recovery directives 2010/24/EU). When I left France in 2013 the unpaid bill was less than half amount. When I came to the UK I sold my all ornaments (sales document I have) just to rent a small flat and to buy food (in my very poor situation). If I don’t pay the HMRC will take legal action to recover the amount.

    Now I am receiving housing benefit (rented house), child benefit, child tax credit, and one child disability living allowance. I check the internet and know bankruptcy not affected any of my benefits. If I am right?

    According to my knowledge the only option to declare bankruptcy.

    My question: Can you give me a better suggestion not to declare bankruptcy? If I declare bankruptcy how HMRC will act on this issue with France and with me.

    Will any impact on my benefit? Which chapter best for me 7 or 11 or 13 or any other chapter?

    Thank you.

    1. Hi Yasmin

      I understand from what you have said that your debt is owed in France. Given that you have no assets and are on a low income it looks like bankruptcy is absolutely the right solution for you.

      I can confirm that going bankrupt will not affect your benefits in any way. You will continue to receive these as normal.

      If you go bankrupt in the UK your debt in France (as it is an EU debt) is automatically included. You simply list the original creditor on the UK form but indicate that UK HMRC are dealing with it on behalf of the French Authority. In reality this makes the whole thing relatively simple as the Official Receiver only has to deal with HMRC.

      Given you are renting your home it will not be affected. If (as is likely) you have no surplus income you will not have to make any further payments towards the debt. You will be bankrupt for 1 year. The debt would then be effectively written off and you can put this episode behind you (other than of course the fact that your credit rating will remain negatively affected for 6 years).

      Note: In the UK there are no “Chapters 7, 11 or 13 etc. These refer to bankruptcy in the USA. Given you are living in England or Wales the process you need to follow is relatively straight forward as the application is made on line.

  18. Yasmin says:

    Hi James,

    Really many thanks for your kind advice. Few more points I need your kind advice please. Bankruptcy fee £680 paid once or installment minimum £5. Until total amount paid the process will not start you know that. My question to you:

    1) In my present situation, if I don’t apply myself for Bankruptcy (as it is costly) and ignore the HMRC letter, what process or legal action HMRC will take to make me Bankrupt?

    2) As I know next steps after Statutory demand HMRC will apply to the court for Bankruptcy? What process the court will take?

    3) What is the difference between self-declaration (fee £680) AND when HMRC go court to make Bankrupt?

    4) What is your advice for me, self-declaration Bankruptcy OR let HMRC go through court? Is both process takes 12 months or how long the court will take to start counting the date?

    5) VERY IMPORTANT QUESTION: When HMRC unable to collect money than they will take the procedure to make Bankruptcy. 6 years ago I left France, WHY France authority (Revenue and Custom) not takes any procedure last 6 years to make me Bankruptcy even I was not living there?

    Thank you again for your kind free advice for all of us.

    1. Hi Yasmin

      If you ignore the demand from HMRC I can only assume they will try to enforce the debt. It is difficult to know exactly what action they will take. They might try to use a bailiff. Alternatively they might petition to make you bankrupt. However as you have no assets this option seems unlikely as they would have to pay for the application (it would cost them around £2k).

      If HMRC did decide to make you bankrupt there would be a court hearing. If you agree and do not want to object you do not have to attend. You just call or write to the court and tell them you do not want to challenge the petition and are happy for the judge to make you bankrupt.

      Once you are bankrupt you are treated in exactly the same way as if you had submitted the application yourself. It lasts 12 months from the date you are declared bankrutpcy whether you do it yourself or HMRC do it.

      If you chose to make the application yourself you do not need to apply at the court. You use the government’s on-line system. Once you have completed the on-line application form and paid the fee you can submit the application. The application is then reviewed by an Adjudicator. If it is completed correctly and you qualify (ie have lived in England or Wales for the past 6 months) they will make you bankrupt the next working day. It lasts 12 months from that date.

      My advice would probably be to make yourself bankrupt. This is because HMRC may never do it and you do not want to be hanging around for a long time waiting and worrying.

      Unfortunately I cannot answer our last question. I have no idea why the French authority has waited until now to contact HMRC to collect the debt you owe. Perhaps (and this is just a guess) they are worried about the Brexit process and were concerned that unless they acted they would lose the option if the UK leaves the EU without agreement.

  19. Mark says:

    Hi

    I’m currently in about £19000 worth of debt from Credit Cards, Store Cards, Catalogue & 3 unsecured loans. I would prefer the Bankruptcy option as the debts are really weighing me down (my fault i know)…

    I receive Benefits, ESA & PIP which totals £1234 a month + Housing Benefit. I don’t own any property or car and have no single items worth over £500. I’m currently up to date with all payments but every month it’s getting harder & harder to find the money to pay debts…

    I can afford the £680 Bankruptcy fees… but if i go Bankrupt how likely is it would any of my Benefit money be taken from me to pay towards debts?

    Any advice would be appreciated.
    Regards

    1. Hi Mark

      Given your debts are less than £20,000 and you have no assets or surplus income the thought springs immediately to mind that you might qualify for a Debt Relief Order. This solution will give you the same outcome as bankruptcy but only costs £90 to implement. You can get assistance with this from your local CAB.

      That said if you do not want to wait for an appointment with the CAB and you have the fee for bankruptcy together there is nothing to stop you going ahead. This will be by far the quickest route to get things sorted.

      To answer your question about whether you will still have to make payments towards your debts the answer is no if your only income is benefits. The Insolvency Service technical manual section 31.7.40 states the following:

      “31.7.40 IPA or IPO should not be sought where bankrupt’s sole income comprises state benefits

      An IPA or IPO should not be sought where the bankrupt’s only source of income is state benefits…… There is no requirement to undertake an assessment of real disposable income where the only source of the bankrupt’s income is state benefits. In all other cases an assessment should be made even if part of the household income is derived from state benefits.”

  20. Mark says:

    Hi James

    Thanks for the reply regarding Bankruptcy & Benefits.

    If I opted for a DRO instead of Bankruptcy would I be expected to make payments seeing as my only income is PIP & ESA?.

    When I filled in a SOA I had more than £50 spare a month but I read an article on ”Debt Camel” that said this…

    In a Debt Relief Order (DRO), DLA or PIP is counted as “income” however there will be a line added into your “expenditure” that is the same amount for your “disability expenses” – this is often labelled something like “adult care costs”. This means that you will often pass the “not more than £50 a month surplus income” test for a DRO, even if you are currently paying more than that amount to your creditors.
    If all your income comes from benefits, you will definitely pass the DRO spare income test and will not have to make any monthly payments in bankruptcy.
    So the government agrees that disability benefits are required for everyday expenses and shouldn’t be used to pay your creditors.

    …………………………………………………………………………..

    Is this true? if so, then I would prefer a DRO over Bankruptcy.

    Regards Mark

    1. Hi Mark

      Remember if you qualify for a DRO (which I believe you do) you will never be asked to make ongoing monthly payments. Further monthly payments are not required if you do a DRO.

      In terms of your PIP income what you have read is absolutely correct. When completing your monthly income and expenses budget you should included the PIP element in your income. However you should included an amount in your expenses for the exact same amount. I normally advise simply calling this “PIP related Expenditure”. The two things then cancel each other out. You do not need to justify what the money is actually spent on.

      That said given all your income is made up of benefits the official receiver automatically assumes you have no surplus income anyway. As such as Debt Camel says you will definitely pass the DRO surplus income test. If you went bankrupt you would not be asked to make ongoing monthly payments.

      Given you would qualify I suggest you make an application for a DRO. You will need to speak to an approved intermediary about this. I suggest you make an appointment at your local CAB. Step Change Debt Charity or PayPlan can also help.

  21. Mark says:

    Thanks for the info James…

    I have just added up my debts and i’m just over 20k.

    Can I pick & chose which debts I want included in a DRO? so I would definitely be under the 20k limit?

    Say if i was to leave out a Credit Card debt that i have with my bank for £1200 would that be acceptable? obviously I know I would have to then keep making payments to my bank which i would be happy to do.

    Regards

    1. Hi Mark

      Unfortunately you cannot leave a debt out of a DRO. As such if your total debt is greater that £20k you will not qualify. The only option would be to pay off a debt to bring your total below the £20k level. However if this means paying more than £680 it is clearly counter productive as the cost of going bankrupt is only £680 which you can do straight away.

      Remember in your situation bankruptcy and a DRO would give exactly the same outcome.

  22. Hannah says:

    Hi I’m wanting to go bankrupt but can’t afford to pay it in one go as I’m on benefits and I have a lot of debt is there any other options to pay for it

    1. Hi Hannah

      Unfortunately the bankruptcy fee always has to be paid. There are no reductions for people on benefits. Having said that you can pay the fee in instalments of as little of £5. The only thing is that the application cannot be submitted until the fee is paid in full.

      Are your debts less than £20k? If so one alternative you might be able to consider is a Debt Relief Order (DRO). This gives exactly the same outcome as bankruptcy but only costs £90 to implement. The DRO is specially designed for people on low incomes who will struggle to pay the bankruptcy fee.

      If your debt is greater than £20k or you do not qualify for a DRO for some other reason then one other option is contacting a charitable organisation. There are some who might be able to help you with the Bankruptcy fee.

  23. Tammy says:

    Hi I’m in the early stages of bankruptcy I’m unemployed at the beginning of the year due to my metal health issues and never been on benefits before. I’m entitled to a few benefits which will be over £1000 a month can the bankruptcy still take money of me if it’s over £1000 in benefits? Thanks Tammy

    1. Hi Tammy

      If your only income is benefits you have no need to worry. Even if the total you receive is greater than £1000 non of your benefits will be taken from you to pay your debts. You would only ever be asked to make payments towards your debts by the Official Receiver if you have earned income such as wages or a combination of wages and benefits.

      If your situation does not change and you do not get back into work before you are discharged then you will never be asked to make further payments towards your debts.

  24. Roger says:

    Hi. I claim carers allowance for my partner who claims esa/pip. Where should enter my partners pip payment as an expense on the application form?

    Ultimately all of our income currently comes from state benefits, with no view to change in the foreseeable future. Is it likely I will end up with a payment order, in your opinion?

    1. Hi Roger

      Your partner’s PIP has to be included as part of her income on your application. However you do not have to justify how this is spent. As such you include the same amount in the expenses section under “other expenses” right at the bottom. Call it PIP expenditure. This money should not be taken into account by the OR when calculating surplus income

      Your carers allowance is not actually treated as a benefit by the OR. As such in theory some of it could be taken from you if you have a surplus. However I think this would be very unlikely given the only other incomes you have are benefits. As such I do not believe you will get an IPA.

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