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Bankruptcy FAQs

What is bankruptcy?

Bankruptcy is a formal insolvency procedure which results in a 'Bankruptcy Order'. Once a bankruptcy order has been passed it can be very costly and difficult to get it reversed, known as an annulment. It is the court that decides who makes the payment; therefore it is not always the debtor who is left to foot the bill. Generally speaking, if an annulment of bankruptcy is warranted it will either be because the bankruptcy should not have been made in the first place, for example if the debt owed to creditors was paid or the correct procedures for bankruptcy were not followed, or an IVA has been agreed.

We hope that this answers your question; “What is bankruptcy?. If you require any further information please do not hesitate to call one of our advisors on 08000 915004.   arrow image Back to top

How long will I be bankrupt for?

Generally bankruptcy ends within one year, however if you fail to co-operate with your Official Receiver this period can be extended. There are other legal circumstances which could result in an extension, or restrictions being placed on you after bankruptcy, however these do not apply to most people.

If you are thought to have available disposable income then you could be asked to make payments towards your bankruptcy, these payments would last for three years. The fact that you have been bankrupt will stay on your credit rating for six years.

We hope that this answers your question; “How long will I be bankrupt for?. If you require any further information please do not hesitate to call one of our advisors on 08000 915004  arrow image Back to top

How do I make myself bankrupt?

To petition for your own bankruptcy you need to contact the bankruptcy department at your local county court, or the High Court if you live in London or Northern Ireland, and they will inform you of the relevant fee and provide you with the necessary forms.

These forms need to be filled in and ready to take to the court on the day of the petition. If you struggle to fill in these forms or are unsure of anything, appeal to the court Clerk who should go through the forms and help with any questions.

If you prefer, you can follow the links below to download the necessary forms: Form 6.27 ‘The Petition Form’ http://www.insolvency.gov.uk/pdfs/forms/form6-27.doc Form 2.68 ‘Statement of Affairs’ http://www.insolvency.gov.uk/pdfs/forms/form6-27.pdf

We hope that this answers your question; “How do I make myself bankrupt?” If you require any further information please do not hesitate to call one of our advisors on 08000 915004  arrow image Back to top

How much does bankruptcy cost?

There are two fees that need to be paid, the first of which is the court fee of £150. If you are receiving benefits then the court may waive or reduce this amount. The second is the administration fee which is £335. If you petition for bankruptcy in the High Court there is also a £7 charge to swear the statement of affairs, however if you petition in a County Court there is no fee.

Some companies offer to complete the petition forms for you but be careful as they can charge some high fees for this. If at all possible try to complete the forms yourself, ask your local Citizens Advice Bureau or if you are only stuck on a few questions ask the bankruptcy clerk at the court.

We hope that this answers your question; “How much does bankruptcy cost?. If you require any further information please do not hesitate to call one of our advisors on 08000 915004  arrow image Back to top

Can my creditors make me bankrupt?

Creditors try to avoid petitioning for a debtor’s bankruptcy as it usually means they will receive a reduced amount of the debt. They will incur higher expenses petitioning for your bankruptcy as it costs more for a creditor to do than a debtor. Creditors must be owed £750 or more in order for them to be permitted to petition for bankruptcy and the debt owed must be unsecured.

We hope that this answers your question; “Can my creditors make me bankrupt?. If you require any further information please do not hesitate to call one of our advisors on 08000 915004.  arrow image Back to top

How will bankruptcy affect my credit rating?

When you have been declared bankrupt this information will stay on your account for six years from when the bankruptcy was first registered. During this time you should not be able to get credit or will find it very hard to do so. You cannot obtain credit over £500 whilst bankrupt without stating the fact that you are a bankrupt.

Once you are discharged from bankruptcy, you can apply to the court for a certificate of discharge which can then be applied to your credit file.

We hope that this answers your question; “How will bankruptcy affect my credit rating?. If you require any further information please do not hesitate to call one of our advisors on 08000 915004  arrow image Back to top

What will happen when I go to the court?

When you take your completed forms back to the court, you will see the judge, normally in his chambers. They will check that you are insolvent, which means your liabilities are greater than your assets or that you cannot afford to repay your debts as they fall due. The judge will then agree the bankruptcy order and refer you to the bankruptcy clerk who will contact the Official Receiver’s office to arrange your interview.

We hope that this answers your question; “What will happen when I go to the court?. If you require any further information please do not hesitate to call one of our advisors on 08000 915004  arrow image Back to top

What will happen at my interview?

The Official Receiver will go through your bankruptcy form and request any missing information or ask questions that may arise from the supporting documents you have supplied. They will also see if they can make agreement with you for a monthly amount to be paid into your bankruptcy. This would be called an Income Payments Agreement. It is essential that you are honest and open about your affairs with the Official Receiver; as failure to do so may delay your discharge from bankruptcy.

We hope that this answers your question; “What will happen at my interview? If you require any further information please do not hesitate to call one of our advisors on 08000 915004.  arrow image Back to top

Who is the Official Receiver?

The Official Receiver (OR) is a civil servant who is employed to check through your bankruptcy forms and to see if there is evidence of any possible return for your creditors.

They will also make the decision whether to administer your bankruptcy themselves or in a case with a lot of assets, for example a property with a lot of equity, they will pass the case out to an Insolvency Practitioner who will take on the role of Trustee. The Official Receiver can decide to call a meeting of creditors which you may be required to attend, for the purpose of appointing a Trustee.

We hope that this answers your question; “Who is the Official Receiver?. If you require any further information please do not hesitate to call one of our advisors on 08000 915004.  arrow image Back to top

What do I have to do if I’m made bankrupt?

When a bankruptcy order has been made you need to give the Official Receiver information about your financial affairs, make your assets available, provide recent bank statements and details of any policies. If you are self-employed, you will be required to provide your accounts, papers and records.

Pensions are viewed as an income therefore will be taken into account when the OR is making a decision regarding Income Payments Order. You may have to go to court to explain why you are in debt and you must not make any direct payments to your creditors.

We hope that this answers your question; “What do I have to do if I’m made bankrupt?” If you require any further information please do not hesitate to call one of our advisors on 08000 915004.  arrow image Back to top

Will bailiffs come to my house?

Contrary to the popular belief it is rare that a bailiff or Official Receiver would visit your home. This tends to happen more widely in the case of trading businesses. The more fully you co-operate with your Official Receiver or Trustee the less likely they are to have need to visit your home at any time.

We hope that this answers your question; “Will bailiffs come to my house?” If you require any further information please do not hesitate to call one of our advisors on 08000 915004.  arrow image Back to top

What happens to my house?

Whilst in bankruptcy you lose control of your assets, and as such your house and other valuable possession are at risk. If there is equity in your house then your Trustee would look to release the equity, up to the value of your debts, in your house. This would normally be by way of sale, however, your Trustee may also accept an offer of payment for the amount of equity in your property by way of a re-mortgage or funds from a third party such as your partner or a family member.

If you do not maintain payments to your mortgage and any secured loans whilst you are bankrupt you will reduce the chance of being able to remain in the property as the secured lenders may encourage action for the house to be repossessed and sold.

We hope that this answers your question; “What happens to my house? ” If you require any further information please do not hesitate to call one of our advisors on 08000 915004.  arrow image Back to top

Can I keep my car?

The Official Receiver or Trustee would evaluate the value of your car when deciding whether or not to realise it as an asset for your creditors in much the same as they would realise equity in a house. If your car is worth around £2,000 you will be able to keep it as the costs involved in recovering and selling the car would outweigh any benefit. Also, as with houses, if there is only a small amount of equity in your car then a friend or family member could make an offer to the Official Receiver for the amount of equity in order for you to be able to keep the car.

You may also be able to keep the vehicle on the grounds that it is exempt, this generally means that you need it as part of your job, for example if you are a sales representative who has a clause in his contract referring to a car, or if you are disabled and require the vehicle for help with your mobility.

We hope that this answers your question; “Can I keep my car?. If you require any further information please do not hesitate to call one of our advisors on 08000 915004.  arrow image Back to top

What will happen to my partner?

Your partner will not be affected directly if you do not have any joint debts. If you do have joint debts then you are both jointly and separately liable and the creditors will want your partner to pay in full any debt that is included in your bankruptcy.

We hope that this answers your question; “What will happen to my partner?” If you require any further information please do not hesitate to call one of our advisors on 08000 915004.  arrow image Back to top

Will other people know I’m bankrupt?

When you are made bankrupt the details are printed in the London Gazette and the Legal Notices section of your local newspaper. They are also available on the bankruptcy register maintained by the Insolvency Service. It is a public document and can be viewed by the public on the internet.

Banks and buildings societies, mortgage or secured loan companies, and people you owe money to will be informed of your bankruptcy and your landlord, employer, pension and insurance companies may be informed if you do not provide information that the Official Receiver or Trustee asks for.

We hope that this answers your question; “Will other people know I’m bankrupt? If you require any further information please do not hesitate to call one of our advisors on 08000 915004.  arrow image Back to top

What debts can not be included in bankruptcy?

Debts that cannot be added in bankruptcy include court fines, student debts, and CSA debt and benefits overpayments. This list is not complete so it is worth checking first to see which of your debts would be included.

We hope that this answers your question; “What debts can not be included in bankruptcy?” If you require any further information please do not hesitate to call one of our advisors on 08000 915004.  arrow image Back to top