There are thousands of people in the UK going bankrupt every month simply because the minimum payments for Credit Cards they have used have become more than they can afford. Its common to have more than one credit card in the UK. This is really not necessary and can be the start of a downward spiral of interest charges.

The secret is to have one credit card and one credit card only and to ensure the full payment is made at the end of the month. It is ok to have the second card as an emergency, in case the first one does not work. It is common for Credit Cards to be rejected at the point of payment if the card has not been used for sometime. This is a security measure exercised by most banks and credit card providers.

It is common in the UK to have a £30 – 40k Credit Card bill and if you were to pay the minimum amount for two or three years you would have actually paid about the same amount in interest. During the boom period a 30-40k debt was ok for the sole trader or the sales person who worked on a commission basis as nett income was often in the £10k category.

Credit cards typically offer around 30 – 60 days of free credit depending on the date the purchase was made, . if it was at the end of the credit card billing period or at the beginning of the billing period.

What happens if all these minimum payments get to the point you cannot service them anymore, especially with the penalties piling up fast.  Firstly thank God you are in the UK, why? because the Government has kindly created a financial tool called bankruptcy so you can start again from scratch and forget your old debts. If you do file for bankruptcy and succeed there is a good chance you will never have access to decent credit for the rest of your life, unless you changed your name.

If you do not own any property you are lucky, if you have owned a property and have decided to transfer it to someone else or sell it before petitioning for bankruptcy, it will be seen as an offence and will be deemed as fraud.

The first step is you need to tell yourself you do not need to or you do not own anything, that is the first hurdle. You might say what about the stigma of being known as a bankrupt……., well the stress of having the bailiffs on your back and constant calls from the Credit Card companies is far worst. In the UK becoming bankrupt is straightforward and can be done by yourself without using or middle man or an agent.

You need to go online and fill up a bankruptcy form called the statement of affairs  from insolvency.gov, or yes there is a new name for bankruptcy and it does not sound as bad, it is called insolvency. You need to be 100% honest when filling up this form, because the insolvency officer also known as the official receiver will interview you and cross examine you regarding  your form, your savings, your businesses and your assests.

In London going bankrupt is a one day process in the High Court of Justice and will cost you around  £500.00 cash.

At the High Court of Justice you will need to first make a payment and then get your forms stamped saying you have made the payment. You will then be directed to a room where you will need to submit this form and you will need to swear before the comission making in a sworn affidavit. After making the sworn affidavit you will have to return after lunch at approx 2.00pm to the judges office. Here you will find approximately 20 – 30 like minded people as yourself who have overspent on their credit cards. They will normally blame their employers, family members, business, the economy and everyone else except themselved for their predicament. If the judge is happy with what you have said your bankruptcy will be granted, if not you will have to go out of court, loose your £500.00 and face the wolves.

Once your bankruptcy is accepted and the sworn affidavit and the statement of affairs form is handed back to you the official receiver will officially be in charge of your estate and whatever you own. Seeing that you have arrived in this junction, it would mean you probably own nothing, and have sold off everything paying Credit Card interest charges and penalties. As Warren Buffett says, don’t buy things your don’t need during the good times, you will find yourself selling the things you need during the bad times.

The official receiver will phone you for an interview in a few days. If you have a steady job and still have an income you might be ordered to service some of your debts (income payments order, the court will not make an income payments order, neither would an income payments agreement be agreed that would leave you too little income to meet the reasonable domestic needs of you and your family, if an income payments order or an income payments agreement is made against you, the payment will usually stop after 3 years)  the final amount are up to the  discretion of the official receiver.  After a year you need a letter from the official receiver saying you have been officially discharged of your bankruptcy, if you do not receive this letter, your debtors than have a right to pursue you again for your debts.