What is the minimum amount of debt to file for bankruptcy?

17 July2012
Bankruptcy woman

A lender can technically petition for your bankruptcy if you owe them 750 or more. If you are applying for your own bankruptcy, there are no set guidelines about how much debt you must have, but bear in mind that it costs up to 700 up front to apply for your own bankruptcy.

You should only apply for bankruptcy if you have debts that you really cannot afford, because bankruptcy can cost you your home and have a big effect on your future. When you go bankrupt, it's recorded on your credit history and stays there for six years. This can cause problems if you apply for all sorts of things, like a mortgage, a mobile phone contract, a bank account - and even some jobs.

Having said that, bankruptcy can offer a 'light at the end of the tunnel' if your debts are completely out of hand, because it usually takes one year to go through bankruptcy (although your payments could go on for three years) and anything you can't afford is written off when you're discharged.

If it looks like the best way forward, we can help you to apply for bankruptcy. Leave your details with us and we'll contact you to discuss your options - or you can call us on 0800 195 2911.

An alternative to bankruptcy

A Debt Relief Order, or DRO, is a low-cost alternative to bankruptcy for people with debt problems who don't have any valuable assets and are on a low income. It only costs 90 to apply.

A DRO is similar to bankruptcy except your debts are frozen for 12 months and you aren't expected to make any financial contributions on a DRO. Lenders cannot take any legal recovery action - and your debts are written off at the end of 12 months (unless your circumstances have improved and you can start repaying your debts).

You could qualify for a DRO if your unsecured debts are up to 15,000 and your assets are worth 300 or less (which doesn't include a car up to the value of 1,000). You would only qualify if your disposable income was also 50 or less per month - the money you have available after your essential living costs.

You cannot apply for a DRO if you're already involved in any other insolvency proceedings, or if you've already had a DRO in the last six years.

If you're a homeowner, you couldn't apply for a DRO, because your home is an asset that's bound to be worth more than 300.

Like bankruptcy, a DRO will have a significant effect on your credit rating for six years.

Speak to a debt adviser here.

Image AlphaSpirit - Fotolia

Try our debt solution finder

Answer a few simple questions and find out which debt solutions could help you, based on your circumstances.

Your Situation

Your Details

Please remember, this is just an information tool. We would always recommend you speak to a debt advisor for the most appropriate way to resolve your debt problems.
We'll give you an on-screen recommendation and call you. One of our advisors will be in touch to answer any questions you may have about your results.
Your privacy is important to us. All correspondence is held in the strictest confidence and we will only request information required to find your debt solution.


Tags: debt relief order, DRO, bankruptcy, debt

Fees payable when continuing service is provided. Repaying debt over a longer period may increase the total amount to be repaid. Calls are recorded and are usually free from UK landlines. Mobile phone users may be charged and should check with their service provider. Cards are provided by third parties and are subject to eligibility, status and terms and conditions. Applicants must be UK residents aged 18 or over.

All About Money Limited © 2014. Registered Office: Think Park, Mosley Road, Trafford Park, Manchester, M17 1FQ. Co Reg No. 4926097. Registered in England and Wales. Authorised and regulated by the Financial Conduct Authority in respect of consumer-credit related activities and is an appointed representative of Think Insure Limited, FCA registration number 310071, and Think Loans and Mortgages Limited, FCA registration number 310069, both of which are authorised and regulated by the Financial Conduct Authority in respect of their insurance mediation and regulated mortgage activities. www.fsa.gov.uk/register/home.do. Regulated by the Claims Management Regulator in respect of regulated claims management activities.