Handling Bankruptcy when you are jobless in UK

Bankruptcy is a stage when a person or a organization has legally been declared unable to pay its creditors. Bankruptcy can be filled either by the person himself or by a creditor on his behalf. At this phase, all the assets are being evaluated to repay the outstanding debts.
If you find yourself meeting the next conditions, then it's most likely that applying in court for bankruptcy can be your sole option.

If you have been let go from your job and posses no assets and no available income.
If you have retired, or you are sure you will have no future need for credit.
The advantages of filing for bankruptcy are that all your unsecured debts are written off, the exception being student loans. Also, depending on the conditions of your discarge, you will be able to make a fresh start after twelve months.

Of course, there are disadvantages to this procedure. As such, you may have to sell your home and other assets such as cars worth more than £500
You won’t be able to get credit during the period of bankruptcy.
Credit is very difficult or expensive to get afterwards.
A bankrupt cannot have certain careers or be a director of a company.
Your situation may be made public.
It is only a court of law that can declare you bankrupt, and also not every courts deals with bankruptcy cases. It can be a volutary decision you will be able to make, thus you can make yourself bankrupt by petitioning, or applying, to the court. Also, your creditors can usually do that for you, petition the court if you owe them at least £750. Afterwards, you are bankrupt once the court issues a bankruptcy order against you.
Bankruptcy fees and procedures you have to follow are different in states of UK and these are also different in Northern Ireland and Scotland.

The next step after this is that you have to hand over any assets of value and also you will have to cooperate with the trustee - a person appointed to manage your bankruptcy – and hand over the financial interest in your home. Your trustee will be either an insolvency practitioner, namely an authorised debt specialist, or an Official Receiver, an officer nominated by the bankruptcy court. Since appointing a trustee will take a bit of time, this Official Receiver will manage your bankruptcy at first. They will collect all information on your finances and will also protect your assets for your creditors.
If your assets are significant, it is likely the Official Receiver will recommend your creditors to appoint an insolvency practitioner as trustee. If that is not the case, then the Official Receiver will continue acting as trustee.

Insolvency law in UK was created so that it can give honest debtors a clean start. This process will relieve you of the most part of your debts by allowing you to repay creditors as much as possible through the sale of your existing assets. Excluded from these assets are such as tools of a trade and also a solvent spouse’s share in your house.

Your employment status does not have any direct bearing on your eligibility to file for bankruptcy. Due to your lack of income as an unemployed individual you may accumulate many unpaid debts that will cause your creditors to either threaten to pursue collection actions or end up actually doing so. On this account, bankruptcy can possibly be beneficial to you: it will be able to keep creditors from carrying out such harsh actions or demanding your payments. However, in order to apply for bankruptcy, you must be able to pay the court bankruptcy fees, and you will also be required pay for credit counseling.

This credit counseling must be provided by an approved agency within 180 days before you file your petition to the court. Credit counseling should help you to find alternatives to bankruptcy, and only in the case bankruptcy is your best option, they will also help you to decide which bankruptcy filing is best for you. Being unemployed, you may not be able to afford paying a credit counseling agency for their services, and if you do not do so, you cannot file for bankruptcy.
Now, if you find a way to afford credit counseling, you can file for bankruptcy. There are also bankruptcy fees to be paid. Otherwise, the court may dismiss your case. The bankruptcy court might allow you to pay your fees in four different installments, the last one not later than 120 days after you have filed for the procedure or 180 days only with the court's authorization.

To file for Chapter 7 bankruptcy, you must pass the "means" test, which requires your income to be lower than the average income of your state. Since you are unemployed, your income is lower than the average, thus you are eligible to file for Chapter 7 as long as you do not have any other sources of income, such as annuity payments. To file for Chapter 13, your debts cannot exceed $360,475 (unsecured) and $1,081,400 (secured). Given the fact that you are unemployed, a Chapter 13 filing is not convenient for you, because it will require you to make monthly payments to your creditors for at least three consecutive years. These payments would comprise most of your income. On the other hand, Chapter 7 erases all of your debts, and it does not require you to make payments. You will lose personal assets and properties once you file for Chapter 7, but after you've been discharged, most of your debts are gone, and your creditors cannot seek further payment. The credit counseling will offer you all the alternatives you need to be aware of and what is the best solution for your needs.

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