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Who can become Bankrupt?
An individual who is insolvent i.e. cannot afford to repay their debts when they are due, or whose debts are greater than their assets.
Who can make me Bankrupt?
An
individual can petition for their own bankruptcy
provided that they live in England or Wales.
In addition to this, a creditor or creditors can petition to make an individual bankrupt provided that the amount owed to them is more than £750, or the Supervisor of an Individual Voluntary Arrangement can petition for an individual to be made bankrupt if they have not complied with the arrangement.
How do I make myself
Bankrupt?
Go to the Court
in your residential area, obtain and complete
the appropriate forms and pay the Court fee. The
forms can be obtained from www.insolvency.gov.uk
How long will my
Bankruptcy last?
Generally if the bankruptcy was made after 1 April 2004, it would normally be discharged within the year. However, the bankruptcy discharge could be suspended if you fail to carry out your duties under the Insolvency Act 1986.
What are my duties as a Bankrupt?
Your duties as a bankrupt are:
- to comply with the Official Receiver and/or Trustee in Bankruptcy's request for information;
- to give the Official Receiver full details of assets and liabilities and provide all documents relating to these and your financial affairs;
- to maintain and hand over assets to the Official Receiver or Trustee;
- to inform the Official Receiver and/or Trustee of any changes in income or expenditure, address and any lump sum payments such as: money left in a will, redundancy, insurance claim, windfall, lottery win.
- to stop using credit cards and bank or other accounts immediately;
- not to obtain credit of £500 or more from any third party, without informing them that you are bankrupt;
- not to make payments to any of your creditors. This would be a preference as these creditors would consequently be in a better position than those who received no payment; and
- to attend meetings with the Official Receiver, the Trustee or at Court.
What can’t I do if I am made Bankrupt – your restrictions?
If you are made bankrupt you cannot:
- obtain credit of £500 or more from any person or entity that has not been informed of your bankruptcy;
- trade your business in any name other than the trading name you utilised when you were made bankrupt;
- act as a director of a company or take part in the formation, management or promotion of a company without leave of Court;
- act as an Insolvency Practitioner or hold other professional licenses.
What can happen
if I do not carry out my duties?
A bankruptcy restriction order or undertaking could be issued against you by a court. This would result in your bankruptcy duties and the above restrictions being extended for a period of 2 to 15 years.
Do I pay any
creditors when I am Bankrupt?
You must pay any creditors who hold security on your home or other assets as the lender may be able to re-possess that asset if the account falls into arrears.
You would be still liable to pay "non-provable debts". These include court fines and other obligations arising under a court order granted in family proceedings or payments made under a maintenance assessment under the Child Support Act, benefit overpayments, continuing commitments such as rent and your student loan.
What will happen
to my assets?
You would no longer be in control of your assets. However, you would be allowed
to keep tools, books, furniture and equipment needed by you personally in your
employment, business or vocation: and clothing, bedding, furniture, household
equipment and other basic items required by you and your family in your home,
provided that their value is less than the costs of a replacement.
After your bankruptcy has been discharged, the assets belonging to you at the time of the bankruptcy would still vest in the Trustee and would be under his control until they were dealt with. There is an exemption in respect of any residential property owned by you.
What will happen
to my pension?
A Trustee can only claim specific types of pension as an asset if the Bankruptcy Petition was presented before 29 May 2000.
Pensions are generally exempt if a petition has
been presented after this date and provided
that the pension has been approved by the Inland
Revenue.
If excess monies have been paid into a pension
fund prior to the bankruptcy, the Trustee may
have a claim on these funds if it can be proved
that these were excessive and/or placed out of
the reach of creditors.
What will happen
to my business?
If you are self-employed your business is closed down and any employees are dismissed. Any business assets would become part of the bankruptcy estate, unless it is exempt property, and all accounting records and returns must be brought up to date and given to the Official Receiver.
Following your bankruptcy you may start trading immediately
providing that you comply with the
restrictions.
Your employees can claim for monies
owed to them for wages, holidays, notice payment
and redundancy from the Redundancy Payments Service.
What will happen to
my home?
The Trustee would calculate the share of the equity that belongs to the bankruptcy by attaining a valuation of the property and details of any amounts due to secured creditors i.e. mortgage companies and creditors who have a legal charge
Any joint owners would be kept informed of the Trustee's actions at all times and would be contacted to determine whether they wish to purchase the bankrupt's share of the property from the Trustee.
It could be more appropriate to sell the property and a willing sale tends to achieve a better price, therefore providing greater funds for the bankruptcy estate.
If there is no realisation, co-operation
or solution, the Trustee has the following options
in relation to the house:
- order for sale;
- order for possession; or
- charging order.
The Trustee would ensure that within three years of the Bankruptcy Order being made either the bankrupt's interest is realised (sold) or the procedures set out above have been followed.
If this is not the case, the Trustees interest in the property automatically returns to the bankrupt and the Trustee can take no further action.
To talk
to one of our specialist team members please call 0800
458 3320 and ask to speak to a member of our advice
team who will be happy to discuss YOUR personal circumstances
and help YOU decide which way is the best way forward
for YOU.
We understand that you may require
guidance and encouragement to help you through these
difficult times.
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