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Bankruptcy and Insurance

A debt solution may not be suitable in all circumstances. Fees may apply and will affect your credit rating

Bankruptcy could mean you are left without insurance cover particularly if you pay by installments. Insurance companies’ terms usually require that they are notified of yours or a named driver’s bankruptcy. The chance of paying by installments is slim as the insurers will check your credit rating which will show you are bankrupt. This is particularly relevant if you are running a business and have insurances to cover:
  • Public Liability
  • Car Insurance
  • Professional Indemnity Cover
  • General business cover
There are specialist brokers that can help you to find cover while bankrupt but it is likely to come at a price. Most of the insurance policies named above will have insolvency exceptions or clauses that permit the policy to lapse in the event of insolvency. Getting a new policy during the term of your Bankruptcy could be difficult due to credit checks. Also you can only take on credit of up to £500 without having to tell the provider that you are an undischarged bankrupt. It is important to review your insurance cover before you go bankrupt. As an alternative to Bankruptcy, you may want to consider an Individual Voluntary Arrangement.

More about bankruptcy

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Client Story

Shirley and her husband were involved as partners in the purchase of a potential development with another couple. Unfortunately part way through the development the relationship between the 2 couples broke down and Shirley and her husband decided to exit the deal and hand over their share to the other party. This resulted in action taken against Shirley’s husband and he chose to petition for Bankruptcy. At the time no action was taken against Shirley. However, some years later the other party issued a writ against Shirley and entered into a Deed of compromise to repay of £57,000 the debt by monthly repayments. Shirley’s sought advice from The Business Debt Advisor team on Shirley’s behalf. Shirley’s health had been seriously effected by a bout of cancer and the stress of the debt was effecting her recovery. As Shirley and her husband lived in rented accommodation and had minimal assets, it was clear that bankruptcy was really the only sensible option. The Business Debt Advisor team helped Shirley pull together financial information on her assets which were minimal plus her debts and income and expenditure. We helped her complete her bankruptcy application online and her husband who was still working, helped out with the application fee of £680. Within days Shirley was bankrupt and her experience of dealing with the Official Receiver was very positive. They agreed with her that she would affordable pay income contributions of £210 per month for a 3 year period.