Money Matters: 'Is bankruptcy for me?'

Debt advice from the Kevin Boon of the Consumer Credit Counselling Service

The eighth in our 'ask the expert' series, which sees Kevin Boon of the Consumer Credit Counselling Service (CCCS) answer a question on bankruptcy.

Q. Dear Kevin, I hope this isn't too simple a question but since my debts got out of hand a year or so, my friends have continuously recommended I declare myself bankrupt. I am a widow and we upwards of £30,000 and to make matters worse, I lost my job three weeks ago. I'm not particularly keen to discuss my financial problems any further than that but what I'm really after is a basic outline of what bankruptcy actually is, what it means, and how it might affect me. Could you help? - Maureen Gallagher, Brighton

A. Hi Maureen. Bankruptcy is a form of insolvency, so your unsecured debts need to outweigh your assets, such as property or vehicles, for it to be considered. If you make yourself bankrupt, your creditors write off your unsecured debts. This allows you to have a fresh start.

There is a non-negotiable fee that you have to pay to the Official Receiver to go bankrupt that is currently £360, but this is increasing to £450 from April 2010. You then also need to pay £150 to the court to cover administration costs. If you have a low income or receive benefits, you may be exempt from the court fee allowing you to go bankrupt for £360.

You are normally discharged from your bankruptcy after a year but it can be extended depending on your situation. Whilst you are in your bankruptcy, there are some restrictions that are put in place. You cannot borrow any further credit and would have to declare any changes within your circumstances to the official receiver during this year. You may be asked to sell valuable assets, but you are able to keep most of the things you need for day-to-day living.

This is just a brief outline. Making yourself bankrupt is a big step to take and requires expert advice. If you are considering bankruptcy, you can use our online debt counselling service, which will provide you with the most appropriate solution to your debt problem. Alternatively contact our free Helpline on 0800 138 1111.

If it is an option for you and you decide to go ahead, we can also offer you extra support through our bankruptcy support team. They can answer any questions you have about bankruptcy .

Having problems with debt?

Every Friday, Kevin Boon of the Consumer Credit Counselling Service will answer your questions and provide expert advice on the best way to deal with debt. Send your questions to j.hall@independent.co.uk with 'Money Matters' in the email subject line.

CCCS is a national charity giving independent advice to anyone worried about debt, delivered free of charge by expert counsellors. Based in Leeds, CCCS is able to help people with debt problems wherever they live in the UK, through its free national telephone service (0800 138 1111), ten regional centres and online debt remedy service ( cccs.co.uk/debtremedy).