How to Avoid Bankruptcy

UK Property Finance Ltd have sole access to a funding line provided by our sister company, UK Bridging Loans. This funding line has been specifically designed to provide short term finance quickly and efficiently, with the specific aim of preventing bankruptcy.

Our experience has shown that many individuals facing bankruptcy have the ability of prevent it happening, however they leave the arrangements too late to stop the bankruptcy proceedings taking place and subsequently they are left with avoidable long term credit issues. Often they have a completely clean credit file prior to the bankruptcy but the bankruptcy will now show for many years to come.

How we Can Help to Avoid Bankruptcy

UK Property Finance can potentially arrange funding in a matter of days and will often communicate with petitioners to ensure that our clients avoid bankruptcy, even if we are only informed just a few days before the bankruptcy hearing.

Our finance is a short term fix, often no more than 12 months in length and an acceptable repayment strategy must be agreed prior to funding. Once the bankruptcy is avoided our clients have the time to action their strategy without a huge millstone hanging around their necks.

What Happens When You Declare Bankruptcy?


It has become surprisingly commonplace to hear of so-called celebrities and famous faces declaring bankruptcy. Tabloid newspapers in particular seem to delight in the misfortune of A to Z listers falling on hard times.

What exactly does it mean to declare bankruptcy & more importantly, what actually happens to an individual and their lifestyle/assets after being declared bankrupt?


It may come across as a complex issue, but bankruptcy is a relatively simple process. When a person is declared bankrupt it basically means that the vast majority or all of their debts are written off or cancelled because they simply cannot afford to repay them.

Bankruptcy occurs by way of a court order in the UK, which in most cases lasts for a year. Following this one-year period you can be formally “discharged” from your bankruptcy. This technically means that you are

once again free to apply for loans and other credit services although you initially may find it difficult to qualify.

It is important to note that it is only possible to declare bankruptcy if the combined value of your assets is less than the total sum of your debts, otherwise, your nonessential assets could be repossessed to repay your debts, in full or in part by your creditors.


Declaring bankruptcy means submitting a formal application and paying a standard £680 fee. It is somewhat ironic that in the majority of the UK you have to pay to declare bankruptcy but the process in Scotland is slightly different. Once you have officially been declared bankrupt, everything you own that has value is no longer your property and can be used to repay your debts.

This can even include the home you live in, though you will be permitted to continue living there prior to its sale.

Some assets are regarded as “exempt goods”. These are considered absolutely necessary to live normally and work. Examples of which could include your home computer and related technology, along with your car if it is necessary for your job.

Given that bankruptcy should only ever be viewed as a last resort, it is important to consider alternative options beforehand such as debt relief orders. It is worth remembering that while you may find yourself free from debt you could also lose everything you own.


The most obvious benefit of bankruptcy is the way in which it could eliminate the debts you simply cannot afford to repay. No more reminders or threatening phone calls, no more demands by post and knocks at the door. Your slate is effectively wiped clean, and you are given a fresh start.

In some instances, bankruptcy is the only option. In others, it is a preferable option to the alternatives available. For example, if you find yourself drowning in debt but have very few assets of value i.e. you don’t own your own car or home, bankruptcy could improve your situation.

The severity of your situation and the combined value of the assets you own will determine whether or not bankruptcy is an appropriate option.


The prospect of losing everything you own is the single biggest consequence to consider. In addition, bankruptcy will impact your eligibility for loans, credit cards and general financial services for some time.

Following the discharge of your bankruptcy after 12 months, it will still feature on your credit history for the next six years. During this time, you may find it particularly difficult to qualify for everyday financial products with major lenders. Some specialist lenders consider applicants with a history of bankruptcy, though the same cannot be said for the average High Street bank.

It is also possible that your job may be at risk if you work in the financial, legal or many other industries. If you own and run your own business, it could be sold off in its entirety to recover your debts.

All of the above should be taken into account and considered carefully, before giving serious thought to declaring bankruptcy.


Bankruptcy is a last resort option that should be avoided at all costs. Even in instances when debt becomes problematic, there are avenues to explore for preventing bankruptcy .

Examples of which include the following:

  • Contact your creditors as early as possible

Rather than waiting for things to hit a crisis point, it is far better to contact and discuss your issues with your creditors. Bankruptcy could result in serious losses on their part should your debts be written off entirely without recovery. It is therefore in their best interests to help devise a mutually viable plan that benefits both parties.

  • Consider a consolidation loan

One popular and accessible alternative to bankruptcy is a consolidation loan. This is where one large loan is taken out to repay most or all of your debts, which are subsequently replaced with one affordable monthly payment. Along with reducing the amount you are required to pay each month; a consolidation loan can also significantly reduce the overall size of your debt.

  • Prioritise your debts

Some debts should always take priority over others, such as mortgage payments, monthly rent payments, council tax payments and utility bills. This is because the consequences of non-payment can be far more serious than defaulting on a mobile phone debt, for example.

  • Seek independent advice

If your debts are spiralling out of control and you simply do not know where to turn, consider seeking independent advice immediately from StepChange or Citizens Advice. It may also be worth consulting with an independent financial adviser or broker such as UK Property Finance who can help you discuss the options available to repay or reduce your debts.