Bankruptcy

[accordion openfirst=true] [accordion-item title=”What is bankruptcy?”]Bankruptcy is essentially a declaration to your creditors that you cannot afford to repay your debt. Once a bankruptcy order has been made your creditors will not be able to contact you directly again. Recent changes to regulations in bankruptcy, effective from 1st April 2004, allow for automatic discharge from bankruptcy within 12 months. You will be required to make payment towards bankruptcy debts for a total of 3 years after the bankruptcy order has been made.[/accordion-item] [accordion-item title=”How can I bring about my own bankruptcy?”] We can assist you in applying for your own bankruptcy. The procedure involves you completing a set of forms, making an appointment at your local county court where your bankruptcy application can be presented to the court. Once consideration has been given to your application by the court clerk, an Order is made and the Official Receiver is appointed in the first instance to manage your financial affairs and to take over negotiation with your creditors. The Official Receiver may appoint a Trustee in Bankruptcy to take over the management of the bankruptcy. This usually happens when there are assets, which can be recovered for the benefit of your creditors.[/accordion-item] [accordion-item title=”What are the consequences of bankruptcy?”]The disadvantages of bankruptcy are that any assets you have at the time of your bankruptcy will vest in the Official Receiver. If you own your own house and there is equity in it the Official Receiver, through the appointment of a Trustee in Bankruptcy, will take steps to take possession of your house and sell it so that any equity can be released to the creditors and help to pay the costs of administering your bankruptcy. Any policies you have will vest in your Official Receiver. This will include any ISA’s, unit trusts and endowment policies.
Whilst a Trustee cannot take any sums out of a pension policy for the benefit of your creditors it is important to note that if you have a works pension policy and you file for bankruptcy your entitlement to a payment out of the policy on retirement may be affected. Whether or not this is the case it can be ascertained from reading the small print in your pension policy. We can help you with this.

People often think that by filing for bankruptcy they do not have to repay their debt. This is not the case. The Official Receiver can expect you to make income payments for 3 years. S/he will assess what surplus income you have each week/month and expect that you pay that sum for the benefit of your creditors. The circumstances surrounding how the debt was incurred will be investigated by the Official Receiver.

In some circumstances the Official Receiver may apply to the court for a Bankruptcy Restriction Order. This would prevent you from being automatically discharged within the 12 month period. Non co-operation could also result in a bankruptcy restriction order. For the duration of the bankruptcy order you will not be able to obtain credit over or act as a company director. There are also some jobs that you would not be able to undertake if you were made bankrupt.

Some employers’ frown on bankruptcy and it may be a term of your contract that you are solvent. If this is the case then there is a chance that you will lose your job as well. If you are concerned about any of these disadvantages then please contact us for further advice. Bankruptcies are advertised in local newspapers and in the London Gazette. You will find it very difficult indeed to operate a bank account whilst you are bankrupt.[/accordion-item] [accordion-item title=”What are the advantages of bankruptcy?”]The advantages of bankruptcy are that the creditors will not be able to make contact with you or make demands for payment directly. Once the bankruptcy order has been made you can look forward to being debt free within 3 years with the potential for the bankruptcy order to be discharged within 12 months.[/accordion-item] [accordion-item title=”Can creditors make me bankrupt?”]Creditors can apply to the court for a bankruptcy order to be made against you. This is a totally separate procedure to that of you applying for your own bankruptcy. Creditors are usually likely to take this step if you have assets which the creditors can require to be sold to repay the outstanding debt or where by the issuing of the petition the creditors feel that they can improve their prospects of receiving payment in full for the outstanding amount.

The procedure for this is that the creditors usually have to apply to the court for a judgment. Then the creditor will instruct enquiry agents to arrange for service of a statutory demand. This is the start of the process. You then have 19 days in which to make an application to the court for the statutory demand to be set aside. If this time lapses and no application is made then in those circumstances a bankruptcy petition can be presented at any time thereafter. If a bankruptcy petition has been presented please contact us for advice on how to defend it or what avenues are available to you.[/accordion-item] [accordion-item title=”What about my bank account?”]All of your bank accounts will be closed and any funds in them used by the Trustee to pay people you owe money to. If an account is in joint names with your spouse or partner then only half the funds can be taken. You’ll be allowed to open a new bank account with the authorisation of your Trustee.[/accordion-item] [accordion-item title=”Will my student loan be written off as well?”]If your student loan was taken out after 1st September 2004 then it can’t be written off. It will be treated as if the bankruptcy had never happened – if you are currently having payments taken directly from your salary then these will continue until the loan is repaid. If you fall below the income threshold no payments will be made until your salary reaches the level where repayments automatically start.
Note that interest will continue to accrue, as per your agreement with the Students Loan Company. If your student loan was taken out before 1st September 2004, you can include the Student Loan Company as a creditor in your bankruptcy and your monthly payments to them should cease.[/accordion-item] [accordion-item title=”What will happen to my Credit Rating?”]Once you have been declared bankrupt, your credit reference agencies will be notified. The bankruptcy order will remain on your file for six years. Even after this time you may still have to declare your bankruptcy status when applying for credit, such as a mortgage.[/accordion-item] [accordion-item title=”Does Bankruptcy write off all my debts?”]Although bankruptcy does clear most of your earlier debts, there are still those which are not written off. These include Court fines, Child support, Debts connected with fraud, Student Loan Company debts and Secured creditors.[/accordion-item] [/accordion]