The Business Debt Advisor

Bankruptcy - Frequently Asked Questions

How long will I be bankrupt for?
You will receive an automatic discharge within 12 months from the date you are declared bankrupt. That is unless your discharge is suspended because you have not cooperated with the person administering the bankruptcy - the Trustee.

However, if you are felt to have accrued the debt culpably, recklessly or dishonestly then you may be subject to a Bankruptcy Restriction Order (BRO) for between 2-15 years.

 

What are the restrictions imposed on me whilst bankrupt?
During the time in which you are bankrupt and in which any BRO's apply, you are prohibited from being a director of a company. Also, if you are self employed, then you cannot trade in any other name apart from your own and you cannot apply for credit for more than £500 without declaring your bankrupt status.

There may also be some restrictions imposed on your profession, especially if your job involves working with money or holding a professional licence.

 

Do you charge for helping me file for Bankruptcy?

If you feel as though Bankruptcy is the only option and you would like us to assist you, we charge £500 +VAT for assistance in preparing the debtors petition paperwork and £600 +VAT if you have a pending charging order.

 

Will I have to pay anything back?
If you are deemed to have a surplus income, after providing for the reasonable cost of living, then you will be asked to make a contribution towards the bankruptcy for a period of three years.

Contrary to what many people think, you are allowed enough money to pay for your reasonable living costs. By completing our debt calculator you will be able to calculate your surplus after providing for living costs.

 

Can I be forced to sell my home or any of my belongings?
Personal possessions of a reasonable nature are excluded from bankruptcy; these include your household possessions and tools of the trade which usually includes your car if you can demonstrate that you need the car to get to work. The Trustee is entitled to ask you to downgrade an item if they feel it is extravagant and introduce funds raised into your bankruptcy. For example if you have a car on hire purchase, which is judged to be too expensive and consequently affects the amount your creditors would receive, then you will be asked to trade it in for a cheaper vehicle.

Assets which have value including your equity in any property, in excess of £1,000, will have to be realised to pay creditors. The money is generally raised either through remortgaging the property, or if that is not possible, by selling the property. If the amount you need to raise is relatively small, it is always worth considering if family can help you raise the necessary sums to prevent the sale of the property.

 

Is anybody going to come to my home?
It is unlikely that anybody will come to your home, although the Trustee does have the power to investigate whether you have any other assets which you have not disclosed in your statement of affairs.

 

Will my employer or anybody else find out?
Bankruptcy is public therefore advertised in a local newspaper as well as in the London Gazette. Bankruptcy and BRO's are also recorded onto a register freely available to the public via the internet. As such there is the possibility that others may be alerted to your bankruptcy.

Your employer may find out about your bankruptcy because the Trustee can apply direct to Court for an Income Payments Order which will instruct your employer to deduct Income contributions direct from your salary. This can be avoided by agreeing voluntarily to pay income contributions to your Trustee.

 

Is it possible to include ALL debts in bankruptcy?
Bankruptcy is binding on all creditors including credit card debt, utilities charges or even your council tax. Matrimonial, criminal and student debt do, however, survive bankruptcy and remain your responsibility after discharge.

 

How will bankruptcy affect my credit rating?
Bankruptcy will remain on your credit records for a period of 6 years. Once you receive your discharge it will be recorded on your credit profile; this may not be done automatically therefore it is beneficial to ensure your credit file is always kept up to date. During the time you are bankrupt you are prohibited from obtaining credit for more than £500 without declaring your bankrupt status.

With bankruptcy on your credit record, it is likely to affect your ability to obtain credit, bank accounts with a cheque card and possibly even certain types of employment.

Once it is off your record then you can start to rebuild your credit, for example by obtaining a small overdraft facility and making sure you do not exceed your limit. If you established a reliable record with your bank, and you do need additional finance, the bank may be prepared to consider a loan.

Once you have begun to rebuild your credit you should be able to apply for prime rates again and then transfer balances from the sub-prime lenders you have been using.

 

Will I be allowed a bank account?
When you are made bankrupt your existing bank will be informed and your account may be frozen. It is worth approaching your Trustee to obtain his/her permission to unfreeze your bank account especially if you have no other bank account into which you can pay your wages.

There is no restriction on operating a bank account but you will not be allowed an overdraft facility, cheque book and or even a debit card. For help finding a bank that will open an account, see Basic Bank Account Matrix.

 

 

The Next Step

All debt solutions should be very carefully considered; we will always provide you with the best advice to ensure you get a soft landing away from the burden of debt. Simply forward your details on our Contact Form and we will contact you. Alternatively ring us on our FREEPHONE ADVICE LINE 0800 085 1825 to have a full consultation with our specially trained advisors.

The Insolvency Service has produced a guide: In Debt - Dealing with your creditors, to support those who find themselves in financial difficulty during the recession.

 

Financial Information

All debt solutions should be very carefully considered. Fees will be charged if a solution is taken in order for us to set up and maintain your plan - all fees will be outlined during your consultation. For further information on fees, please see the FAQ section of the different solutions available. Retained payment may place you further into arrears. The Debt Advisor complies with the Consumer Credit Act and you have a right to a cooling off period of 7 days. It is likely that your ability to obtain further credit in the short term will be affected and this may also be the case over the medium to long term.