Bankruptcy Questions

Please Also See The Following Related Pages:

Pros and Cons & How To File Bankruptcy

Bankruptcy Rules and Law

Alternatives To Bankruptcy

Administration Orders

Can Bankruptcy Stop Foreclosure/Repossession?

Bankruptcy Questions -
What exactly Is Bankruptcy?

It is a legal process that leads to you being free from debts that you cannot repay.

Bankruptcy Questions -
Can you tell me how to file Bankruptcy?

You make a petition to the County Court for your area, or the High Court in London. This includes details of the debts you owe, any assets you have and your income and expenditure. The court will examine this and decide whether it is appropriate to make a Bankruptcy Order. An Official Receiver will be assigned to you, and this person will be responsible for disposing of your assets as necessary to raise money to pay to your creditors. Any amount still unpaid at the end of the process is usually written off.

Bankruptcy Questions -
How Do I Go About Becoming Bankrupt?

You can get the forms you need to make a petition from the County Court for the area where you live. The forms you need are the 'Debtor's Petition' and the 'Statement Of Affairs'. You can also complete these forms online on the Insolvency Service website. You will have to swear an oath before you can present your petition. This can be done with a solicitor, court official or Commissioner For Oaths. There are fees that you need to pay, after which the proceedings can commence.

Bankruptcy Questions -
Can I file for bankruptcy for free?

Possibly, depending on your circumstances. Currently the court fee and Official Receiver's fee come to just under £500 per individual. Sometimes the court fee can be waived, usually if you are claiming Income Support or a similar benefit.

Bankruptcy Questions -
Can I be made bankrupt even if I don't want to be?

Yes you can. Anyone that you owe more than £750 to can petition the court to declare you bankrupt. The creditor would need to think there was more chance of getting their money back by making you bankrupt. Creditors who would consider this are likely to be owed larger amounts of money, as there is a considerable cost to them in filing for your bankruptcy. They would need to issue a Statutory Demand to you first.

Bankruptcy Questions -
How long Does Bankruptcy last?

Usually for one year before you are 'discharged' though it could be shorter, depending on the circumstances. During that year you are what is known as an 'un-discharged bankrupt', and certain restrictions will apply to you. See the Bankruptcy Rules and Law page for further details of these restrictions. The Bankruptcy will remain on your credit files for six years from the date of the Bankruptcy Order.

Bankruptcy Questions -
Who will know about my bankruptcy?

There is a requirement to report your Bankruptcy in the legal notices section of your local newspaper, and in the London Gazette. This is intended to give any creditors that are not mentioned in the petition the chance to make themselves known and make a claim. All your creditors who are named on the petition will be contacted by the Official Receiver, as will your mortgage lender or landlord.

Bankruptcy Questions -
Will I lose My Home?

If you own your own home or have a mortgage on it, it may well be sold to pay off your debts. This applies even if you only own a share of the property. Such a sale may be delayed for a while if you are living in your home with your family. If you are in rented accommodation your landlord must be informed about your Bankruptcy. Some tenancy agreements may prohibit the property being let to an un-discharged bankrupt.

Bankruptcy Questions -
What about everything else that I own?

The only items that are generally excluded from disposal are clothes, bedding, basic furniture, any tools you need to carry out a business and a car or van if you require it to earn an income. The main target for disposal will be non-essential items of high value. It is also possible that some essential items may be sold, if they can be replaced with a cheaper alternative.

Bankruptcy Questions -
Can I give things away to friends of family?

Definitely not. The Official Receiver will be going through your assets and financial situation in great detail - if you are found to have given anything away or sold it for less than its market value, you could be subject to a Bankruptcy Restriction Order, which could extend the restrictions of Bankruptcy for up to fifteen years.

Bankruptcy Questions -
Will my creditors still hassle me?

You are protected by the court from being chased for old debts by creditors. Your Insolvency Practitioner will deal with creditors on your behalf. You will not generally need to pay any creditors directly, but you may be required to pay into the Bankruptcy fund, depending on whether you have any spare income.

Bankruptcy Questions -
Are any of my debts not covered by the Bankruptcy?

Bankruptcy does not include court fines, child support payments, benefit overpayments or student loans.

Bankruptcy Questions -
Is there anything I can't do while I am Bankrupt?

• You can't get credit of more than £500 without disclosing that you are an un-discharged Bankrupt.
• Your bank account will be frozen when the Bankruptcy Order is made, and you will need to hand over any bank cards or cheque books to the Official Receiver. Any money in your account will be included as an asset, and any overdraft will be added to your debtor list.
• If you have your own business, you cannot trade under any name other than that under which you went Bankrupt, unless you inform everyone that you do business with about your previous business name.
• You also need permission from the court before you are allowed to be involved in any way with the formation or running of a limited company.

Bankruptcy Questions -
Are there any jobs that being Bankrupt prevents me from doing?

By being bankrupt you are not allowed to be an Insolvency Practitioner, Stock Broker, Estate Agent, Pub Licensee or member of the Law Society.

Bankruptcy Questions -
What are the alternatives to Bankruptcy?

See the Alternatives to Bankruptcy page.

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