Bankruptcy should always be viewed as an extreme last resort, yes all your debts will be cleared but all of your assets; your house, your car, anything of value which you own can be sold off to your creditors. As well as this you will be declared bankrupt in the newspaper and this can affect your future career chances. There are a number of alternatives which could be suitable for some people.
An IVA (Individual Voluntary Arrangement) is one possible alternative. An IVA must be individually approved but you may be able to keep your assets and is a less drastic means to becoming debt free.
Consider your case carefully, write to all of your creditors requesting that you come to an “informal arrangement”; a payment plan can then be drawn up with each creditor. This will require a severe “tightening of the belt” and that each payment be stuck to.
One final alternative is an administration order. This is only possible when debts total less than £5000 and one creditor has a court judgement against you. One payment a month is made to the court and an administration cost is added on to your total debts. The one payment is split between your creditors and during the period that the administration order is being paid no creditor can take action against you and all interest is frozen.