A. Bankruptcy is one way of dealing with debts that you can’t afford to pay. It’s a legal process that:
Any individual can be made bankrupt, including individual members of a business partnership.
A. A court can only make a Bankruptcy Order after a Bankruptcy Petition has been presented. You can present a Debtor’s Petition yourself, or one or more of your creditors can present a Creditor’s Petition if you owe them at least £750 of unsecured debt.
A. Everyone who declares themselves bankrupt has to pay a Bankruptcy Petition Fee. If you’ve asked Debts.org.uk to help with your bankruptcy, you’ll also need to pay our fee. We can help you spread the cost of these fees – please ask us for details.
Bankruptcy Petition Fee
This must be paid in cash to the court on the day of your court appearance. There are two elements to the fee: the Official Receiver’s Fee for administering your bankruptcy, currently £525 per application, and the Court Application Fee, currently£180 per application. If you’re receiving certain benefits such as Income Support at the time of your application, the Court Application Fee may be reduced or waived.
If you and your spouse, or you and a business partner, are both applying for bankruptcy, each of you will have to pay the Bankruptcy Petition Fee individually.
Debts.org.uk Arrangement Fee
This is the fee we charge for our services and the complex work we carry out on your behalf. This includes preparing your Bankruptcy Petition for submission to the court, providing three copies of each of the forms and booking your court appearance. Our Arrangement Fee is currently £500 per application. We offer a reduced fee of £350 each for a second application from the same household, or if your only source of income is from benefits.
A. Not all courts can deal with bankruptcy matters. Generally, you should present your Bankruptcy Petition to the County Court that deals with the area where you’ve lived or traded for the longest period in the last six months. You can use the Government’s online Court Finder service to find the right court in which to file your Bankruptcy Petition.
There are different rules for people living or trading within the London Insolvency District as follows:
A. Once your Bankruptcy Order has been made, the Official Receiver (OR) will be responsible for administering your bankruptcy. An OR is an officer of the Insolvency Service and of the court to which they’re attached. They’re appointed by the Secretary of State.
The OR will give notice of your Bankruptcy Order to courts, sheriffs, bailiffs, HM Revenue and Customs, the Land Registry and any relevant professional bodies. Third parties will also be asked about any other relevant matters relating to your bankruptcy. For example, the OR might ask your employer for confirmation of your salary and benefits package so they can decide if you can afford to make any repayments to your creditors during your bankruptcy (see below).
A. Bankruptcy doesn’t cover every type of debt. Debts that can’t be covered include:
Your Debts.org.uk advisor will help you identify which of your debts can and can’t be included in your Bankruptcy Petition.
A. You must:
A. When your Bankruptcy Order is in place, either the Official Receiver (OR) or a Trustee (if an Insolvency Practitioner has been appointed instead of the OR) will take control of your estate, including any property you own.
They’ll do this by looking at the beneficial interest, i.e. your interest in the proceeds if the property is sold. This is different from the legal title to the property, which is held by the owner. Your beneficial interest is calculated after deducting any amounts owed on mortgages or other loans secured on the home; in other words, it’s the equity in your property. Your home will be sold if this is the only way of realising your interest in the property’s value.
If the Official Receiver is handling your bankruptcy, then your husband, wife, partner, a relative or friend may be able to buy your beneficial interest in the home. This will stop the Official Receiver or Trustee from selling your home later on.
If your beneficial interest has a value of more than £1,000, it may be possible to take part in a property conveyancing scheme run by The Insolvency Service and a firm of solicitors. Under this scheme, the beneficial interest can be transferred back to you, or it can be transferred to your husband, wife, partner, relative or friend.
A. Being made bankrupt could affect your current employment or lead to you being refused certain jobs in the future, so it’s not a decision to be taken lightly. In particular, you could lose your job if you work in one of the following professions:
A. If you’re self-employed when you’re made bankrupt, your business will normally be closed down. Any staff you employ will be dismissed and any company assets passed to the Official Receiver (OR) or Trustee. You must also hand over all your accounting records to the OR or Trustee, although you’ll still be responsible for completing and filing all necessary tax and VAT returns.
Once all this has taken place, you’ll able to start trading again, subject to restrictions. However, you’ll need to re-register for VAT if applicable, as you can’t keep using your pre-bankruptcy VAT number.
A. Firstly, it’s important to remember that if you’re considering bankruptcy, your credit rating is probably damaged already. If you’ve been struggling to pay your debts for a while, any missing payments and other incidents such as County Court Judgements (CCJs) will have been reported on your credit file.
Once your bankruptcy has been listed on your credit file, the entry will stay there for at least six years from the date your Bankruptcy Order was made. This applies even after your bankruptcy has been discharged (see below) and you’ve told the credit reference agencies about this. After the six years have come to an end, your bankruptcy should automatically be removed from your credit file. However, if this doesn’t happen, it’s your responsibility to contact the credit reference agencies and ask for your files to be updated.
Even after the six years has passed, you could still find it more difficult and/or expensive to obtain credit in the future, as a result of your bankruptcy.
You can find more information about credit reference agencies and your credit rating here.
A. Discharge from bankruptcy is a process that takes away the restrictions of bankruptcy and frees you from most of the debts you owed at the date the Bankruptcy Order was made. So it’s at this point that you can make a fresh start. You’ll normally be discharged automatically, even if:
You can find out more about discharge from bankruptcy here.
A. Most bankrupts are automatically discharged after 12 months, on the first anniversary of the Bankruptcy Order being made. However, there are different dates which might apply to you, depending on your individual circumstances.
For all Bankruptcy Orders made on or before 30 September 2013, the Official Receiver (OR) may send a Notice of Early Discharge to the court if they’ve finished their enquiries into your bankruptcy. You’ll then be discharged on the date this Notice is filed in court. You’ll be sent a copy of the Notice so you’ll know the date of your discharge.
Due to changes in the law, Bankruptcy Orders made on or after 1 October 2013 can no longer be considered for early discharge.
A. If, after examining your financial affairs, the Official Receiver (OR) finds that you have surplus income, they might ask you to make payments to your creditors through an Income Payments Agreement. An Income Payments Agreement can last up to three years, so it may continue after your bankruptcy has been discharged (see above).