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Can I go bankrupt while on maternity leave

Can I go bankrupt while on maternity leave

You can go bankrupt while you are on maternity leave. If your income has fallen and you are now struggling with your debt, it could be a sensible option.

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What happens if you go bankrupt while on maternity leave?

Going on maternity leave often results in a drop in your income. If money is already tight, this could make it impossible for you to keep up with your debt payments. In these circumstances going bankrupt could really help.

The advantage over other debt solutions is you do not have to make further monthly debt payments if you can’t afford to. The stress of having to pay your debts is taken away. They are written off and the monthly payments stopped.

Going bankrupt will also give you more freedom to choose whether to go back to work at the end of your maternity leave. You will not be under pressure to increase your income to pay your debt. If you chose not to go back to work, your bankruptcy will end after 12 months and your debt will be written off.

Bankruptcy may not be suitable if you are a home owner. For further advice call us (0800 044 3194) or complete the form below.

Implications if you return to work while you are bankrupt

You may decide you want to return to work after your maternity period ends. Your job will not have been affected as your employer is not told about your bankruptcy. As such, from this perspective, returning to work should not be a problem.

If you start working while you are still bankrupt, you must tell the Official Receiver. They will then review your income and expenses to see how your budget has changed. If you can now afford to make monthly payments towards your debt, you will have to start doing so. These will then last for 3 years.

That said, starting to make debt payments after you go back to work would be unusual. You will only have to do so if you have a surplus income.

Having a surplus income is unlikely because even if your income has gone up, your living expenses will have increased too. For example you will probably have to pay significant child care costs. As such you are likely to have little or no spare money at the end of the month.

Your bankruptcy may already have ended by the time you go back to work. If so, you do not have to inform the Official Receiver. The money you earn is then yours to keep. You will not have to pay your debts regardless of the amount you earn.

What if you don’t go back to work?

Bankruptcy lasts for one year. After that time you will be automatically discharged. If you have not returned to work by time you are discharged, and have not started to make monthly payments, your debt will simply be written off.

You will no longer have to worry about finding the money to pay the outstanding balances. Were you to decide to return to work at any time in the future, the money you then start to earn will be yours to keep whatever your salary.

In other words, going bankrupt gives you flexibility for the future. You will not have to worry that you have to return to work at the same level of income. Because you have no debt payments to worry about, you could consider returning to work part time on lower pay or taking a less stressful but lower paid role.

Are you on or about to go on maternity leave and want to learn more about how going bankrupt could help you? Give us a call (0800 044 3194). The advice is free, confidential and without obligation.


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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
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