What is Bankruptcy?
Bankruptcy is a legal status that you can adopt if you are unable to pay your debts, this is known as being insolvent. Whilst for some people, bankruptcy can be advantageous, it is not for everyone. Bankruptcy has a bad stigma attached to it as it has received a lot of bad press. Obviously it is not an ideal situation, however, if you find yourself to be insolvent, it is something you should consider. There are, however, good alternatives to bankruptcy that you should consider such as an IVA or Individual Voluntary Arrangement or even with lower debt levels, a Debt Management Plan may be enough to avoid more severe consequences.
Bankruptcy Information
The number of bankruptcies in the UK doubled in the first quarter of last year following a change in legislation which reduced the time before a bankrupt is considered discharged.
Bankruptcy, however, is not an easy option as it stays on your credit reference for at least six years and can lead to the loss of your home and possibly your job.
For impartial advice from one of our bankruptcy specialists call us FREE now on 0800 899 9188 and find out what your options are.
Bankruptcy – the positives
The only positive of bankruptcy is a big one – once you are discharged from bankruptcy you are no longer liable for any of the debts included in the bankruptcy proceedings.
Bankruptcy – some of the negatives
- Any of your assets can and probably will be sold, including your car and home
- You will not be able to work in the Police Force, Armed Forces, Local Council or Government. Private sector employers will also often perform a credit check on potential employees.
- You can’t act as a director of a company
- You need court permission to take any part in the management of a limited company
- Any member of your family, or your employer could be scrutinised in court if the Official Receiver believes this will help the investigation
- The bankruptcy order will stay on your credit file for six years
- If a bankruptcy restriction order is granted you won’t be able to act as a school governor, Member of Parliament or a member of your Local Authority.
Call Delta Debt Management FREE now on 0800 043 2332 for a free debt consultation from one of our bankruptcy experts and get debt help. All calls are in the strictest confidence and you are under no obligation whatsoever.
More Bankruptcy Information
Where are bankruptcy orders made?
Bankruptcy petitions are generally presented in the High Court in London or at a county court near where you live or work (bankruptcy petitions may not be dealt with at all local county courts).
Who would deal with your bankruptcy petition?
There are two people involved in most bankruptcy petitions. There are:
Official Receiver in bankruptcy
Official Receivers are people designated to protect your assets if you have any, if not they will act as trustee of your bankruptcy affairs.
Insolvency practitioner in bankruptcy
If you have any assets, like a house or car, an Insolvency Practitioner should be appointed to sell your assets to pay your creditors. After a bankruptcy order has been made against you, you can no longer be asked for payment from your creditors. All payments are handled by your insolvency practitioner.
How will being bankrupt affect you?
What will happen to your assets in bankruptcy?
Once you’re ‘bankrupt’, the Official Receiver, will sell your assets such as your car to pay your creditors. There are specific exclusions from this for items deemed necessary to live for example:
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equipment for your work like tools or vehicles
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household items needed by you and your family like clothing, bedding and furniture
If you are a home owner, you may be required to sell your property. This depends on who owns it, how much it is worth, and what equity you have.
What will happen to your earnings in bankruptcy?
When you are bankrupt The Official Receiver (after looking at your income and taking into account expenses such as your mortgage, rent and household bills) may decide that payments should be made to your creditors.
You can be asked to sign an ‘income payments agreement’ which will commit you to paying fixed monthly payments from your income for up to three years.
If your circumstances change, you’ll need to tell the Official Receiver, so they can review these arrangements.
Do you need to pay ongoing commitments in bankruptcy?
Yes. All ongoing commitments such as rent and mortgages must be paid.
How long will bankruptcy last for you?
Bankruptcy normally lasts for one year, although this may be different, get advice from a professional. Once this has passed, regardless of what you owe, your bankruptcy will be discharged.