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Bankruptcy

The Process

We realise that dealing with debt is a particularly difficult, stressful and confusing time. It makes sense to talk to family or a trusted friend but we know this is not always possible. If you are struggling with debt stress, we recommend you read helpful information which offers help and advice on dealing with debt stress.

Opting for Bankruptcy needs careful consideration. The decision should only be taken after you have taken independent advice from a practice regulated by the Financial Conduct Authority to offer debt counselling advice.  The prime reason is that your affairs will be investigated and if your behaviour prior to bankruptcy is found to be reckless or fraudulent or you have gifted away assets, you could face a Bankruptcy Restriction Order.

If after consultation, Bankruptcy appears the most appropriate solution, it will be necessary to complete an online application to petition for your Bankruptcy. We can help you prepare the application. When completing the online application, you will need to ensure you have the following information to hand:

  • Your personal details
  • Your employment details
  • Details of your bank accounts and any savings accounts
  • Details of your assets, for example your car and property details if applicable
  • Details of the money you owe, including account numbers and outstanding balances
  • Details of your income and your expenses
  • Details of any legal proceedings you have been served with
  • You debt history for example your reasons for accruing the debts

The application is relevant if you live in England and Wales or have lived there in the past 6 months. The application need to be completed accurately. Bankruptcy is a legal process and there can be problems if you fail to detail all your information correctly.

Bankruptcy applications were previously dealt with through the courts but as of 6th April 2016, applications are now submitted online. You can do this yourself, or nominate an insolvency practitioner to do this for you.

Before submitting your application, you will need to pay a £680 fee. This consists of a £130 adjudicator fee, and a £550 bankruptcy deposit.

Once submitted, you application will be reviewed by the adjudicator.

Once you are made bankrupt, this is followed by an interview with the Official Receiver, who initially acts as Trustee in Bankruptcy. The Official Receiver has 12 weeks to decide whether an independent Trustee should be appointed to manage the bankruptcy and if so, whether a meeting should be held to appoint the Trustee.

Whilst the above process is taking place your bank accounts may well be frozen meaning you won’t have any access to money. We would recommend that you withdraw enough money out of your account to cover the cost of living whilst the bankruptcy is being approved.

Period of Bankruptcy

As of 1st April 2004 the discharge period for bankruptcy is twelve months after the date of the Order if the Official Receiver reports that there are no matters of concern. For those individuals who were made bankrupt before 1 April 2004, they will get their discharge after three years or on 1 April 2005, whichever is sooner.

From April 1st 2004 second and subsequent bankruptcies will be treated the same as the first bankruptcies i.e. discharge 12 months after the date of the Order. That is unless the discharge is suspended because the bankrupt has not co-operated with their Trustee.

 The Effect of Bankruptcy

Whilst bankrupt, if you have surplus income after taking into account your reasonable costs of living, the Trustee will ask for a monthly contribution from your income for a period of three years; as such payments continue beyond the discharge period.

The assets excluded from bankruptcy comprise:

  • Personal possessions of a reasonable value
  • Tools of trade including vehicles, books or other items of equipment needed personally in your employment

The Trustee in Bankruptcy will then decide what happens to all assets not exempt from bankruptcy. They have a duty to realise these assets for the benefit of creditors. However, it is possible to agree with the Trustee that a sum of money is paid to them to enable you to keep hold of the asset. This money must come from an independent source and cannot be your money.

The bankruptcy proceedings are advertised in the London Gazette and can be advertised in a local paper if the Trustee feels this is necessary to bring your bankruptcy to the attention of creditors. Advertising in the local press is at the discretion of the Trustee.

Is there anything else I should know?

All debt solutions should be very carefully considered. There are other solutions to be considered including DMP, IVADebt Relief Orders, Debt Consolidation through raising Finance and Dealing with Creditors Directly.

Fees will be charged if a solution is taken in order for us to set up your plan and maintain it – 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. You have the right to a cooling off period of 14 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. Calls to our free phone number from mobile phones and other networks may be charged.

The Insolvency Service website has helpful information on https://www.gov.uk/options-for-paying-off-your-debts/overview to support those who find themselves in financial difficulty during the recession.

There are sources of free debt advice and services. You can find out more by contacting the Money Advice Service on https://www.moneyadviceservice.org.uk/en/articles/where-to-go-to-get-free-debt-advice or 0300 500 5000 (8-8 Monday to Friday, 9-1 on Saturday).

Frequently Asked Questions “FAQ’s

We have produced FAQ’s on all debt solutions including Bankruptcy