Why choose bankruptcy?
- To declare yourself bankrupt is the ultimate sanction you have in order to deal with your financial situation.
- If you declare yourself bankrupt all the assets you own and all the debts you owe will be caught in the bankruptcy.
- Bankruptcy means that you will no longer be pursued by your creditors for money you owe to them. This is usually the main reason for choosing bankruptcy – being free from the pressure of your creditors.
- Bankruptcy does have its consequences. For most people this will mean that any equity they may have in their home is no longer theirs to deal with. It also means there will be restrictions on certain things you do during the currency of your bankruptcy.
- Bankruptcy is not a decision to be taken lightly. As insolvency practitioners who have had offices locally for over 30 years we are happy to talk to you if you are unsure of any aspect of the bankruptcy process. Please call 01782 201120 or email contactus@moorestoke.co.uk.
- When you make yourself bankrupt all the assets you own (including any equity in your home) and all the debts you owe are caught in the bankruptcy.
- Your unsecured creditors will no longer be able to pursue you for their debts.
- If you own a home with a mortgage against it any equity will vest in your bankrupt estate and you will still have an obligation to your mortgage company regardless of the bankruptcy. If mortgage payments are not maintained then you could be at risk of having your home repossessed.
- After having declared yourself bankrupt and paid the appropriate fee of £680 your file will be passed to the Official Receiver (OR) the government insolvency practitioner (IP). He will be your Trustee in Bankruptcy.
- The OR will either retain your file or he will appoint an independent IP to be your trustee in bankruptcy.
- Either way you will have a duly appointed trustee in bankruptcy to oversee your bankruptcy until all matters have been dealt with.
- Being bankrupt will affect you in a number of ways. For example:
- You cannot borrow more than £500 without telling the lender you are bankrupt
- You cannot act as a director of a limited company or be involved in the management or promotion of a limited company
- Any assets you own will be sold and the proceeds paid into your bankruptcy estate. You can usually keep:
- Items needed for your job such as tools or a vehicle – of modest value.
- Household items – of reasonable value
- Provided you cooperate with your trustee in bankruptcy you will normally be released from the restrictions of bankruptcy after 12 months. This is called your Discharge from Bankruptcy. Up until this point you were an undischarged Bankrupt. You will now be known as a Discharged Bankrupt.
Until such time as all the aspects of your bankrupt estate have been dealt with, even though you may be a Discharged Bankrupt, you will still have a trustee in bankruptcy administering the affairs of your bankruptcy and you will still be obliged to cooperate with him.
There are no time limits for a bankruptcy. They last for as long as they last. However, if you have an interest in your matrimonial home the following applies: - Your trustee in bankruptcy has three years in which to realise your share of any equity in the home. If there are any dependants in the home such as your spouse or your children the trustee must wait 12 months before taking any action to realise your share of the equity.
- If your trustee does not realise his interest in your equity within the 3 years it will automatically by operation of law revert back to you.
- To petition for your own bankruptcy you must go online https://www.gov.uk/apply-for-bankruptcy
- After having declared yourself bankrupt and paid the appropriate fee of £680 your file will be passed to the Official Receiver (OR) the government insolvency practitioner (IP). He will be your Trustee in Bankruptcy.
- The OR will either retain your file or he will appoint an independent IP to be your trustee in bankruptcy.
- Either way you will have a duly appointed trustee in bankruptcy to oversee your bankruptcy until all matters have been dealt with.
Q Will I lose my home?
A Your trustee in bankruptcy has three years in which to realise your share of any equity in the home. If there are any dependants in the home such as your spouse or your children the trustee must wait 12 months before taking any action to realise your share of the equity.
If your trustee does not realise his interest in your equity within the 3 years it will automatically by operation of law revert back to you.
Q What will it cost?
A To make yourself bankrupt costs £680
Q Will my bank account be frozen?
A An overdrawn bank account will be frozen automatically. Any account in credit will form an asset as part of your bankrupt estate.
Q What happens to my pension?
A Any money you have in a pension will normally fall outside of the bankruptcy, unless you have made excessive contributions. If you are in receipt of your pension, this will be classed as income and will be assessed to see if you are able to contribute to an Income Payment Agreement.
Q Will I lose my car?
A You can keep a car of modest value (the Official Receiver’s guide says £1,000). If you have a more valuable car, this must be sold and the proceeds paid into the bankruptcy, but you are entitled to keep £1,000 for a replacement.
Q How will bankruptcy affect my credit rating?
A Your bankruptcy will stay on your credit record for 6 years. After 6 years you should contact the Credit Reference Agencies to remove your bankruptcy from the registers.
