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The Bankruptcy Service Case Study Example: Bankruptcy & The HMRC.

The following bankruptcy case study is a fictitious example, designed to help you understand working situations where bankruptcy is and isn't appropriate.

A look at bankruptcy and tax liabilities.

Unfortunately I recently had to close down my business after 10 years, due to the economic downturn. I am now on benefits, have no money set aside, but still have a range of credit card bills to pay off. I didn’t declare any earnings to HMRC when my business closed, and am worried that if I now declare bankruptcy, I am liable for the tax I owe.

First of all, I would suggest contacting HMRC to see if you actually owe them anything. You may be worrying over nothing, so I suggest talking to them, rather than ignoring a potential problem. If it turns out that there is a substantial payment due, you might consider bankruptcy or a Debt Relief Order (if the amount is below £15,000 (or £20,000, which is planned as the new limit after October 2015)). A Debt Relief Order (DRO) is similar to bankruptcy, and is suited to those on low or zero income. If bankruptcy is the best option, you will need to find £525 for the official receiver’s fee, though you should be exempt from paying the £180 court fee. Any unsecured debt can be included in your DRO or bankruptcy. I would seek advice immediately, and see what can be done for you, so that you are not overwhelmed with debt for good.

Free debt counselling and advice is also available from the Money Advice Service available at: doesn't charge a fee for its bankruptcy service, but receives remuneration from the partners that we work with in order to keep operating. Those partners must charge a fee to the customer to likewise cover operational costs, and this amount will vary depending on the solution offered, and the terms of the parner. For details of these terms, please refer to the website of the organisation dealing with your bankruptcy. Upon application with, we will forward your information on to one of our specialist debt partners. You will then be contacted, and you will be able to explain your case, and expert advice will be offered in order to ascertain the most appropriate debt solution.