Bankruptcy

England and Wales

Anyone can go bankrupt with debts over £750. It is carried out at a county court (which deals with insolvency). Normally by a District Judge or Deputy District judge.

To find you local court- click here

A court fee of £485 is payable on the day in cash. If you have certain benefits this amount can be reduced (not by much though).

When a bankruptcy order has been made, you must:

  • Comply with the Official Receiver’s request to provide information about your financial affairs. The Official Receiver may request that you attend at his or her office for an interview(this is more likely if you have been involved in a business or if thier is any evidence of mis-conduct such as gambling or fraud - the Court will give you the address of the Official Receiver or you can check online-click here.

    (Note: usually before the interview, you will be sent or given a questionnaire which you should fill in as fully and accurately as possible.) If the Official Receiver does not ask that you attend at the office for an interview, you will be sent a letter which will set out what is required of you.

    Again it is likely that you will be asked to complete a questionnaire-which is based around the statment of affairs. You should note that in either circumstance, any questionnaire completed before the bankruptcy order, supplied to you by an adviser or another third party, will not be acceptable; 

  • give the Official Receiver a full list of your assets and details of what you owe and to whom (your creditors); 
  • look after our assets and fully co-operate with the Official Receiver with respect to information regarding:- your books(if applicable), records, bank statements, insurance policies and other papers relating to your property and financial affairs;
  • tell your trustee about assets and increases in income you obtain during your bankruptcy. (Note: by law you must inform your trustee of any property which becomes yours during the bankruptcy. Such property includes lump sum cash payments that you may receive, for example redundancy payments, property or money left in a will);
    Stop using your bank, building society, credit card and similar accounts which by their nature involve credit. That is accounts with overdrafts and credit facilities. Basic bank accounts are normally operated OK in bankruptcy. If you have any doubt about your bank accounts please ask an advisor.
  • whilst undischarged from bankruptcy-not obtain credit of £500 or more from any person without first disclosing the fact that you are bankrupt; 
  • not make payments direct to your creditors or show preference to any creditor.

 

 

 

You  have to go to court to present a debtor's petition, creditor's petitions do not require you to attend court.

Advantages
  • Debts are written off
  • Bankruptcy is automatically discharged after 12 month (provided there is full co-operation with the Official Receiver and there is no evidence of mis-conduct)
  • Creditors stop chasing by law
  • Court proceding are stopped
  • Baliffs will stop persuing debt if it is in the bankruptcy
  • Once a bankruptcy order is made (providing there is not a high disposable income) there are no more fees to pay.
  • The day after discharge a mortgage may be applied for (conditions apply-ask the FSA advisor)
Disadvantages
  • Credit rating is affected
  • All assests are under the Official Receiver until discharge
  • Bankruptcies are published in the loacal paper, the London Gazette and the Stubbs Gazette
  • If there is a high disposable income an income payment order can be made which lasts for 3 years.
  • Assets such as cars over £2000 could be at risk.
  • The beneficial interest of a home (House value-Mortgage-secured loan(s)-charging order(s)) will have to be settled with the official reciever. Normally this is done via remortgage where beneficial interest is postive. If the house is in "negative equity" this could be bought by a third party for £1 plus legal costs.