What is a Bankruptcy?
Bankruptcy is one way of dealing with debts you cannot pay.
The bankruptcy proceedings:
- Free you from overwhelming debts so you can make a fresh start subject to some restrictions; and
- Make sure your assets are shared out fairly to your creditors.
Anyone can go bankrupt, including members of a partnership. There are different rules for companies.
How are you made Bankrupt?
A court makes a bankruptcy order only after a bankruptcy petition has been presented. It is usually presented by:
- Yourself (Debtor's petition); or
- Creditors who are owed at least £750 by you (Creditors' petition)
A bankruptcy order can still be made even if you refuse to acknowledge or agree to the order. You should therefore co-operate fully once the bankruptcy proceedings have begun. If you dispute the creditors' claims you should try and reach a settlement before the bankruptcy order is made: trying to do so afterwards is difficult and expensive.
If you want to make yourself bankrupt you should contact your local court. They can give you the name, address and telephone number of the nearest county court that deals with bankruptcy. The address and telephone number of your local court is listed under "Courts" in the phone book: references here are to civil courts - the county courts - not magistrates courts.
You will have to pay a fee to the court unless you are on state benefits
What are my duties as a Bankrupt?
When a bankruptcy order has been made you must:
- Go to the offices of the Official Receiver and provide information relating to your financial affairs;
- Provide the Official Receiver within 21 days of the making of the bankruptcy order a full list of your assets and what you owe;
- Look after and then hand over your assets to the Official Receiver and all your books, records, bank statements relating to your property and financial affairs;
- Tell your trustee about assets or increase in income you obtain during your bankruptcy;
- Stop using your bank, building society and similar accounts straightaway;
- Not obtain credit
You may also have to go to court and explain why you are in debt. If you do not co-operate, you could be arrested.
If you own your own home it will probably have to be sold to go towards paying your debts.
Do I Have To Pay a Fee For An Application In The County Court?
There will usually be a fee to pay with your application. You can ask the court not to pay the fee in some circumstances. The form you will need to fill in is called an EX160 "Application for a fee exemption or remission." This form needs to go to the court with your main application. If the court agrees your application you will not have to pay the fee. If you pay a fee when you should have been exempt or would have qualified for a remission, then you have six months to apply to the court for a refund.
Fast Track Individual Voluntary Arrangements (F.T.V.A.)
If you have been made bankrupt it is still possible to have a form of IVA called a "Fast Track Individual Voluntary Arrangement" which means the bankruptcy order can be annulled. You put forward a payment proposal to your creditors that would mean they will be paid more than they would under your bankruptcy. The Official Receiver runs the F.T.V.A. for you if they agree with your proposal. The F.T.V.A. is cheaper than an ordinary IVA as there are set fees and costs. If it fails then your creditors could try to make you bankrupt again.
Are there any alternatives to Bankruptcy?
The new Bankruptcy law reduces Bankruptcy for most people to just 12 months. However, if you are a homeowner with a good amount of equity in your home, you are better off looking at the IVA option as you keep your house!
Do You Qualify For IVA?
Most People Do.
If you have over £15,000 unsecured debt + 3 or more creditors - you qualify
You can still look at overturning your Bankruptcy within 1 year of the issue date. Call us for more information.
Are you a Home Owner? We could save you from Bankruptcy AND Keep you in your home!