Bankruptcy is a legal procedure designed to help people who are unable to pay off their debts within a reasonable time and whose circumstances are unlikely to change in the foreseeable future.
In order to apply for bankruptcy, the unsecured debts in question have to outweigh the applicant's assets; these include their property and cars.
The Bankruptcy debt solution was developed to ensure that the creditors receive a small sum of what they are owed.
In order to do so the applicants may be required to sell their assets.
Any money raised from these sales will be split between the creditors.
Not only is filing for bankruptcy a serious matter, it can also be quite expensive.
Bankruptcy should therefore only be considered as a last resort debt solution.
When filing for bankruptcy in the United Kingdom a fee of £175 will become payable to a court, and an additional fee of £525 becomes applicable to the Official Receiver.
Personal bankruptcy As bankruptcy may be used as a solution by businesses to draw a line under their debt problems, the term 'personal bankruptcy' is used to explain the act of someone entering into bankruptcy as an individual, rather than a business.
When applying for bankruptcy, applicants will be appointed an OR (Official Receiver).
The OR will take control of all assets (including money, property, and cars) and make sure that all creditors receive a fair share of the client's assets.
Depending on one's individual situation, bankruptcy applicants may be required to make regular contributions towards their bankruptcy debt.
These payments will usually last for three years.
As a promise make these payments, those whose circumstances qualify them to make contributions will be required to sign an Income Payments Agreement.
If an applicant refuses to sign or doesn't keep up with the payments, an Income Payment Order may be issued which will result in the money to be taken directly out of the applicant's income.
Unless the court believes an applicant has not co-operated with their appointed Official Receiver, hasn't been completely honest about their assets or their claim, or they haven't provided all the information required, applicants should be discharged from bankruptcy within twelve months.
Once someone is discharged, their personal bankruptcy will be over.
(However, in the case of an Income Payments Agreement or Order being issued, these will continue.
) Can I go bankrupt? If a creditor, or creditors, is owed more than £750, they are able to file a bankruptcy claim against the person who owes the money.
This process is known as a creditors' petition.
Alternatively, an applicant may request a bankruptcy claim for themselves; in this case the process will be referred to as a debtor's petition.
Those looking to enter into individual bankruptcy may do so by requesting a court to declare them bankrupt.
Applicants are able to obtain a debtor's petition from any court that handles 'bankruptcy jurisdiction'.
Alternatively, the forms are downloadable from the Insolvency Service website.
Once all forms have been completed, applicants will be required to pay a £175 court fee.
(Please note, this fee may be waived if the applicant meets certain criteria.
) An additional deposit of £525 will be required to pay the Official Receiver.
(This will be the officer who will be dealing with the applicants bankruptcy claim.
) Unlike the court fee, the deposit fee cannot be waived.
If the court decides to approve the bankruptcy claim, a bankruptcy order will be made, and finally the bankruptcy will start.
When entering into individual bankruptcy, all applicants will be required to:
A small selection of these consequences include:
Some of the fees which are not covered by the debt solution may include fines, outstanding child support payments, and mortgage arrears.
As mentioned above, bankruptcy is a serious debt solution and should not be considered lightly.
Fortunately there are a number of professional debt-solution businesses who offer free personal bankruptcy advice to those in need.
Besides bankruptcy, there are currently a range of alternative debt solutions which may allow applicants to keep their assets.
Some alternative ways to pay off one's debt include an IVA (Individual Voluntary Arrangement), debt management, and debt consolidation.
It is highly recommended to contact a professional debt advisor in order to receive personal bankruptcy advice and advice on any alternative arrangements available.
In order to apply for bankruptcy, the unsecured debts in question have to outweigh the applicant's assets; these include their property and cars.
The Bankruptcy debt solution was developed to ensure that the creditors receive a small sum of what they are owed.
In order to do so the applicants may be required to sell their assets.
Any money raised from these sales will be split between the creditors.
Not only is filing for bankruptcy a serious matter, it can also be quite expensive.
Bankruptcy should therefore only be considered as a last resort debt solution.
When filing for bankruptcy in the United Kingdom a fee of £175 will become payable to a court, and an additional fee of £525 becomes applicable to the Official Receiver.
Personal bankruptcy As bankruptcy may be used as a solution by businesses to draw a line under their debt problems, the term 'personal bankruptcy' is used to explain the act of someone entering into bankruptcy as an individual, rather than a business.
When applying for bankruptcy, applicants will be appointed an OR (Official Receiver).
The OR will take control of all assets (including money, property, and cars) and make sure that all creditors receive a fair share of the client's assets.
Depending on one's individual situation, bankruptcy applicants may be required to make regular contributions towards their bankruptcy debt.
These payments will usually last for three years.
As a promise make these payments, those whose circumstances qualify them to make contributions will be required to sign an Income Payments Agreement.
If an applicant refuses to sign or doesn't keep up with the payments, an Income Payment Order may be issued which will result in the money to be taken directly out of the applicant's income.
Unless the court believes an applicant has not co-operated with their appointed Official Receiver, hasn't been completely honest about their assets or their claim, or they haven't provided all the information required, applicants should be discharged from bankruptcy within twelve months.
Once someone is discharged, their personal bankruptcy will be over.
(However, in the case of an Income Payments Agreement or Order being issued, these will continue.
) Can I go bankrupt? If a creditor, or creditors, is owed more than £750, they are able to file a bankruptcy claim against the person who owes the money.
This process is known as a creditors' petition.
Alternatively, an applicant may request a bankruptcy claim for themselves; in this case the process will be referred to as a debtor's petition.
Those looking to enter into individual bankruptcy may do so by requesting a court to declare them bankrupt.
Applicants are able to obtain a debtor's petition from any court that handles 'bankruptcy jurisdiction'.
Alternatively, the forms are downloadable from the Insolvency Service website.
Once all forms have been completed, applicants will be required to pay a £175 court fee.
(Please note, this fee may be waived if the applicant meets certain criteria.
) An additional deposit of £525 will be required to pay the Official Receiver.
(This will be the officer who will be dealing with the applicants bankruptcy claim.
) Unlike the court fee, the deposit fee cannot be waived.
If the court decides to approve the bankruptcy claim, a bankruptcy order will be made, and finally the bankruptcy will start.
When entering into individual bankruptcy, all applicants will be required to:
- Supply their appointed Official Receiver with full details or their finances, assets, and creditors.
- Hand all of their assets over to the OR, as well as any accompanying paperwork.
(This may include bank statements, insurance policies, etc.
) - Stop making payments to creditors.
- Stop using any credit card or bank accounts.
- Inform any creditor about their discharged bankruptcy when trying to obtain any credit of £500 or more.
- Inform their trustee (Either the Official Receiver or Insolvency Practitioner) when receiving any new income or assets while the personal bankruptcy is still in process.
A small selection of these consequences include:
- Bankrupt individuals lose the control of all their assets at the date of the bankruptcy, thus risk losing assets of value in order to pay off their debt.
- All bank accounts will be frozen and it may be difficult to obtain a new account free of charge.
- As some professions, associations and legal acts prohibit those who have had a bankruptcy order made against them, or those who are currently undertaking a bankruptcy restriction, Bankrupts are unable to hold a job as a solicitor, trustee of a charity, or a role regulated by the FSA (Financial Services Authority.
) - The Credit Reference Agencies will keep a record and the bankruptcy order will remain on bankrupts' credit reports for six years, making future borrowing difficult and expensive.
(Including taking out new credit or applying for mortgages.
)
Some of the fees which are not covered by the debt solution may include fines, outstanding child support payments, and mortgage arrears.
As mentioned above, bankruptcy is a serious debt solution and should not be considered lightly.
Fortunately there are a number of professional debt-solution businesses who offer free personal bankruptcy advice to those in need.
Besides bankruptcy, there are currently a range of alternative debt solutions which may allow applicants to keep their assets.
Some alternative ways to pay off one's debt include an IVA (Individual Voluntary Arrangement), debt management, and debt consolidation.
It is highly recommended to contact a professional debt advisor in order to receive personal bankruptcy advice and advice on any alternative arrangements available.
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