This is increasingly becoming the right option for many individuals when their debts have become too large for them to manage - especially with the increasing number of people losing their jobs in this recession.

The situation

Our client (whose name is withheld for confidentiality reasons) had reached the end of his tether regarding his financial situation. He decided that he needed to resolve it once and for all.

Over the years he had incurred considerable debts with several different creditors, including Banks (with loans, overdrafts on his current & business accounts and credit card bills), a store card, Child Support Agency and HM Revenue and Customs. The situation had reached the point where his debts totalled more than £40,000.

His outgoings were not untypical items - rent, council tax, insurances, road tax, TV licence, gas, electricity, water, food, travel, child maintenance etc. These totalled about £1,100 per month. His monthly income was about £1,200, and his partner also had a monthly income of over £1,500. Clearly, he was in no position to pay his debts easily.

He had tried to reduce his outgoings and had obtained a consolidation loan to help his situation. However, he found that he was drawing too much income from his business trying to support all the repayments. He wrote to his creditors informing them of the difficulties he was experiencing regarding his repayments.

However, he soon realised that he was fighting a losing battle. So he decided to present his own petition for Bankruptcy. He sought advice from his Accountant. He advised him to call Clarke Bell to discuss whether this was the right option for him and what he should do next.

How we helped him

His was a typical situation, in that he arrived at our office very worried and feeling he was at the end of his world. He had been 'burying his head' for a long time and this was the first real opportunity he’d had to talk openly and honestly about his predicament.

He was given our standard free and no obligation consultation with John Bell, our senior partner, to discuss his options. As he did not own his own property and hadn’t any assets of great value, it was agreed Bankruptcy was his best option - rather than an Individual Voluntary Arrangement (IVA) or Debt Management Plan. (An IVA wasn't suitable primarily because he didn't have a property. Whereas a Debt Management Plan would offer him no form of protection and could last for any number of years until the debts were repaid in full.)

Our client confirmed that he did want us to help him proceed. So, Delyse Plunkett, the Head of our Personal Team, helped him through the daunting, 31-page Statement of Affairs (Debtor's Petition) and ensured that it was completed correctly, with minimal distress to him. She also helped him with other associated matters - including liaising with the Court regarding fees and his appointment, explaining what happens at the Official Receiver's interview and how his Credit Rating would be affected. Had he wanted us to, we would also have attended Court with him - as many debtors do find that a terrifying ordeal.

In this particular case, our client will be out of Bankruptcy within one year. In other cases, where there are no assets and very little work involved, debtors can be discharged from Bankruptcy as early as four months after the making of the Order.

After six years he can expect his Credit Rating to be back to normal.

What are the associated costs?

The standard fees are:

- deposit of £345 towards administration costs (payable in all cases)

- court fee of £150 (in some circumstances this might be waived).

Clarke Bell charges a fee for our services (as we have to pay our bills too). Our client felt it was well worth paying our fee, as he believed this was the most painless way of dealing with the matter. (His partner paid our fee for him.)

Why not just let someone else petition for his Bankruptcy?

The principle benefit of petitioning for his own Bankruptcy was that he was in control of the situation, rather than waiting for someone else, at some unknown time, to dictate matters to him.

It ended with flowers

After everything had been finalised and all his debts were written off, our client delivered a bunch of flowers to Delyse to express how grateful he was for our help.