The first step in bankruptcy is to file a petition and schedules at clerk's office of federal bankruptcy court. Your petition must include a list of all creditors, sources and amount of income, a list of all real and personal property, and a detailed list of your living expenses. You must pay a fee (about $175) at time you file your petition. It is usually advisable to hire an attorney. Be sure to discuss your attorney fees before hand and inquire as to whether you can pay in installments. In a straightfoward proceeding, entire procedure usually takes four to six months.

If you have regular income, Chapter 13 bankruptcy provides a method for repaying your debt over a period of time, according to court-approved plan. The time allowed ranges from three to five years. The same Georgetown study found that average Chapter 13 debtor had unsecured debts of $20,953. To file for Chapter 13, you must file appropriate schedules and petitions with court and pay a filing fee. You must also file a proposed repayment plan. A trustee will be appointed to follow your progress, make regular payments to creditors and to provide court with necessary financial information about you.

Certain debts such as taxes, alimony and child support, student loans and some property settlements can not be discharged through bankruptcy.

Although a bankruptcy filing generally will stay on your credit report for 10 years, it need not be a permanent handicap. There are specific laws that forbid discrimination against persons who have declared bankruptcy. For example, you may not be denied a job or a driver's license just because you filed for bankruptcy. The emotional and psychological scars on you and your family may take some time to heal. You may want to seek support by contacting a professional counselor or clergy member, or discussing your feelings with a close personal friend or family member.

While bankruptcy has tarnished your credit rating, you can usually rebuild confidence from creditors. You can obtain credit if you demonstrate consistent employment record and signs of fiscal responsibility. Start by opening a savings account and obtaining a secured credit card. Make payments on time to build a positive credit profile.

While stigma related to bankruptcy has eased, declaration of bankruptcy remains a difficult and monumental decision which can be viewed as either "last resort" or a "fresh start" on a new life.

But, he does have credit problems and he is going to get a mortgage and that is all he cares about right?

Oh, and £4,500 doesn't have to be paid upfront because all we will do is add it onto loan amount. So that's ok ,right?

NO,NO,NO.

Ok I am talking about a hypothetical situation but this is one that is repeated everyday throughout UK. In my opinion it is nothing more than robbery and shows scant regard for clients wellbeing.

How can anyone justify charging that to a client that will already have to pay a higher interest rate than a clean client would.

So, to recap, £150k loan now becomes £154,500 and that is before you even get to solicitor and arrangement fees, let alone Mortgage Indemnity Premium (MIG.

So, rule of thumb here is a simple one.

Ask your broker to justify their fees and if you find anyone charging a fee of more than 1%, walk away. Quickly.