Bankruptcy FAQs

Bankruptcy is a legal process that can be started if you cant afford to pay all of your debts. It can also be started by someone else if you owe them more than £750 and you have refused or con not make a reasonable monthly payment.

Bankruptcy allows you to reduce debt and make a fresh start. A “Trustee in Bankruptcy”, sells your assets and distributes any monies to people you owe money to, to recoup as much debt as possible.

Call the debt solutions helpline on: 0845 519 6093

After your bankruptcy ends people the you owed money to cant make further claims against you for your debt. Bankruptcy does bring with it certain implication, For example:

The fact you have been made bankrupt is advertised in the local press

Your landlord is told

Your employment may be at risk in some occupations and professions.

Do I lose everything?

When you make yourself bankrupt, all of your assets automatically become the possession of your Trustee in Bankruptcy. They have the authority to sell them without your consent. However, you are able to retain tools, books and vehicle that are considered essential for employment. You can also keep clothing, bedding, furniture and household equipment needed to satisfy the basic domestic needs of yourself and your family.

The assets which the Trustee in Bankruptcy can take are as follows:

Any interest you may have in property, even if it’s held in joint names with a partner

Any shares, bonds, endowments and savings policies

Any funds held in bank or building society accounts

High value assets such as motor vehicles and jewellery, although a suitable lower cost replacement can be provided instead

Lump sums from private and occupational pensions if they mature during the bankruptcy

Pay part of your monthly or weekly wage, either with your consent or through a court order.

If you acquire any asset during the term of your bankruptcy you have to advise your Trustee, who will realise it for the benefit of people you owe money to. Example assets include:

Inheritances, including property, cash, investments and any other asset of value.

A windfall from a win on the National lottery, football pools or bingo.

Money received after the date of bankruptcy but before the date of discharge from your bankruptcy.

Will other people know I’m bankrupt?

It is now unlikely that Bankruptcy Orders will be advertised in a newspaper in your local area. Details are placed on a bankruptcy register maintained by the Department of Trade & Industry and the Insolvency Service. This is a public document and can be seen by the public via the internet.

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 will be allowed to open a new bank account with the authorisation of your Trustee.

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. If you fall below the income threshold no payments will be made until your salary reaches the level where repayments automatically start.

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.

Is my job safe?

Not always. If you are a member of a professional body you will need to check to see if you will lose your membership. This can result in you being unable to continue in your current role. Further clarification will be available if you look at the terms of your contract of employment.

What are my alternatives?

If bankruptcy isn’t a suitable or agreeable option to manage your debt problems then you may want to consider the following options:

A Debt Management Plan - A debt management company that will negotiate monthly payment your creditors, using a lower monthly payment until the debt is paid in full. IVA - An Individual Voluntary Arrangement is a formal agreement to pay a set amount over a set period of time, normally 60 months

What happens in court?

The first step is to complete and submit the necessary forms with a fee. These will petition the bankruptcy clerk for you to become bankrupt, with the County Court that has jurisdiction for bankruptcy in your local area.

The bankruptcy clerk will give you an appointment when your application for a bankruptcy order will be heard. This can sometimes be on the same day as you submit the application.

At your hearing, the court will do one of the following:

Stay or postpone proceedings – usually to await more information in which case a further hearing date will be set.

Dismiss your petition.

Appoint an insolvency practitioner if an Individual Voluntary Arrangement (IVA) is found to be more suitable.

Grant your petition if becoming bankrupt is found to be the way forward.

How long will I be bankrupt?

You will normally be discharged after a period of 12 months and will no longer be bankrupt. This bankruptcy period can be shorter should the Official Receiver complete his/her enquiries earlier.

The duration of the bankruptcy can also be altered in the following circumstances:

The court annuls the order on the grounds that all debts have been paid in full The court annuls the bankruptcy on the ground that the original order was not appropriate The discharge has been suspended as a result of failure to co-operate with the Official Receiver or Trustee. Only after the breach causing the suspension has been rectified will the twelve month period continue.

Although you are no longer bankrupt once discharged, it’s important to note that its effects may extend much longer, affecting your credit rating, for example.

What happens when the bankruptcy order is granted?

Once the order is granted, the court will contact the Official Receivers’ office and tell them that the order has been made. A representative of the Official receivers’ staff will then ask you to attend an interview at their offices to discuss your financial circumstances. You will be requested to complete and return a questionnaire prior to this interview.

Once the Official Receiver has all the relevant information he will decide what assets, if any, will be taken from you. He’ll also assess your income and expenditure to determine whether or not to make an income payments order as well.

Can debt solutions help me get out of debt?

YES we can. Everyone’s personal situation is different and each debt solution is different so we need to work out which will best suit your financial needs.

We will complete a FREE 20 minute fact find with you to work out what your earning and spending and this will let us know how much you can afford to pay to your creditors and also which debt solution is best for you to help you get out of debt. You are under no obligation but I am sure you will be 100% happy with what out debt advisors can do for you and we have the lowest debt managenent fees in the industy

We pride ourselves in our friendly, professional approach to finding the right debt solution for every one of our clients, which is honest, confidential and always the ‘best advice’ based on your individual circumstances.

If you would like to speak to one of our friendly, professional debt experts about any of our debt solutions you can either call our debt solutions helpline on: 0845 159 6093 or complete our online contact form and one of our debt advisors will call you back within the hour.

Start you debt free life today! with one of our debt solutions.

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