Contact us: 0800 044 3194 Calls from mobiles are Free

Can I go Bankrupt if I am on Benefits?

Can I go Bankrupt if I am on Benefits?

Are you receiving benefits such as Universal Credit, Tax Credits or ESA? If so, bankruptcy could be an ideal debt solution for you. If you have no other sources of income you will not have to make any further payments towards your debts.

Included in this article:

Want help to go bankrupt? Give us a call (0800 044 3194) or click here to complete the form below and we’ll call you back

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 such as an IVA which require you to make monthly payments may not be affordable.

If you go Bankrupt and cannot afford to make payments towards your debt you will not have to. The money you owe will 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 the application fee 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 is unlikely to be easy if you are on benefits. However there are some things you can consider which might help.

First can you borrow the money you need? Perhaps a friend or family member can lend you the money. If you have available credit on a card or overdraft you could also use this or borrow from a Payday lender. This is not ideal but you will not be penalised.

If you borrow from friends or family to pay for Bankruptcy, you will not normally be able to repay this money until after you are discharged.

Where borrowing is not an option then you will have to save. To help you do this you should stop paying the debts which you will include in your Bankruptcy. Instead put this money aside and save it towards the fee.

When you stop paying your creditors will probably start to hassle you and threaten Court action. You should explain that you plan to go bankrupt in the near future and request that your account is put on hold.

Read more about topic

Comments 112

  1. Deon M
    17.07.2023

    I am on universal credit. Can i get help with bankruptcy fee. and what will happen to my car if my drive my children to school?

    1. 17.07.2023

      Hi Deon

      There is no specific assistance with the bankruptcy fee for people who are on benefits. The cost of bankruptcy is the same for everyone regardless of income status.

      There are some charitable organisations that do provide grants to cover the cost of going bankrupt. You can find out more about this and whether you might qualify in the last section of this article: The cost to go bankrupt

      If you are struggling with the cost of bankruptcy and owe less than £30,000 you should also consider the option of a debt relief order. This gives the same outcome as bankruptcy but only costs £90 to implement if you qualify. You can read more about this option here: Debt Relief Order

      In terms of your car. As long as it is worth £1500-£2000 or less and you need it for personal mobility (including taking your children to school), it should be treated as an exempt asset and you will be able to keep it. You can read more about this here: Your car and bankruptcy

See other 110 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Learn how your comment data is processed.

Leave a Comment (open/close)
ABOUT THE AUTHOR
James Falla
I have been advising people on how to solve their debt problems for over 20 years. During this time I have helped many people go bankrupt. I am an FCA Approved Person and the Managing Director of Wilmott Turner Financial Services (owner and operator of Bankruptcy Expert
View Posts

Speak to a Bankruptcy Expert