You’ve reviewed your options and taken advice from experts. An IVA is not an option for you or you are unable to agree informal terms with your creditors for a debt management plan. If this is your situation, why not receive a free confidential assessment of your debts options now:
|Solutions||Debts Written Off||Legally Binding||Interests & Charges||Residential Status||Fees||Notes|
|IVA||Yes – Average 58%||Yes||Stopped||Tenant or Homeowner (Eng/Wales)||Yes on average around 20% of the payments you make to creditors||Typically you must have debts over £15,000 and be able to offer yourcreditors about 20% of the value of the debt back over 5 years.|
|Debt Management||No||No||Many Freeze||Tenant or Homeowner||Yes||In a Debt Management Plan, you will be required to repay all of your debt in full.|
|Consolidation||No||yes||New Rates & Charges||Tenant or Homeowner||Yes||Consolidating your debts generally means you’ll pay more back over a longer period of time.|
|Bankruptcy||yes||yes||Stopped||Tenant or Homeowner (Eng/Wales)||Yes – up to £700 depending on your circumstances. You may also be subject to a 3 year Income Payments||You need to think carefully about all the affect bankruptcy will have on your home and your employment.|
|Debt Relief Order||yes||yes||Stopped||Tenant||Yes – £90||You must have debts under £15,000 and have little in the way of assets|
If Bankruptcy appears to be the right solution or you just want to find out more read on
There are only a few ways to become bankrupt. On this page we’re going to explore these ways and offer some really valuable advice on bankruptcy which will really help you move forward with more confidence.
One of your creditors can bring a bankruptcy petition against you if you owe £750 or more, by serving what is called a statutory demand. This demands payment within 3 weeks. If you can’t pay it your creditor can issue a petition to make you bankrupt.
If a creditor has a judgement against you e.g. CCJ and the bailiffs have not managed to seize goods to the value owed, your creditor can miss out the statutory demand phase altogether and go straight to the bankruptcy petition.
Once a bankruptcy petition has been made you’ll get a court date for a bankruptcy hearing. At this point you can:
Pay your debt plus any costs before the hearing
Ask for an adjournment on the grounds that you can convince the court that you can raise the money in a relatively short period of time
If it goes to court, a bankruptcy order will be made.
You can bring your own petition for bankruptcy. The steps are:
You go to your local county court to get the necessary paperwork
You complete the paperwork and ask for a bankruptcy hearing
You take the form and cash to the hearing and after spending a few minutes before the court a bankruptcy order will be made
If you hold a joint account, be aware that the non-bankrupt owner of the account will have their money seized as well. They will get it back if this does happen but it will take time. Tell them to open another account ASAP. Don’t let them take or transfer any money that is not really theirs, however tempting.
Things to expect include:
You must make the interview when asked to do so. If you’re lucky, you may be asked to have the interview over the phone, but if you are asked to go in person you must go. There are no excuses.
The interview is conducted by a member of the official receivers team and often lasts a few hours. What they are looking for is wrong doing.
During the interview they will work through what is called your statement of affairs. This is a form you will complete that looks at your financial history and other related matters. The purpose of running through this is to once again check that you have behaved properly and lawfully.
If the trustee / insolvency practitioner or official receiver believes you may have hidden away assets or sold them off illegally e.g. too cheaply, then you may be asked to take part in either a Public Examination or Private Examination to dig deeper into your affairs. The courts have extensive powers to ask for information from anyone who has had dealings with you, and can even examine a person they think may help under oath.
The official receiver may decide that a creditors meeting is necessary. If he does it must happen within 12 weeks of the bankruptcy order being made.
If you own goods and property of a high value, a meeting may be arranged to appoint an Insolvency Practitioner. You don’t normally have to go to this one.
Let’s start by looking on the bright side – your creditors aren’t chasing you anymore. Here’s what to look out for and what you need to know.
It’s not illegal to get a bank account if you are an undischarged bankrupt or even a discharged bankrupt. The problem is, it’s difficult to find a bank that will do business with you. Here’s a link to a page on more information on bankruptcy and bank accounts.
It’s with building societies that you have the best chance of a normality. Open a savings account with a cash point card and the ability to pay wages into and you’re away. You can’t save money without it being seized by your trustee but you can use it to run a normal cash-in cash-out account. Some good advice here is to wait for a couple of months after being made bankrupt so that your new account doesn’t get caught in the regular updates informing banks and building societies of new bankrupts.
You don’t have to pay your gas, electricity or phone up to the date of being made bankrupt. Each utility company will deal with bankruptcy in a different way and it’s not impossible you’ll be cut off. When you get service restored you may have to pay a deposit or pre-pay for services.
The same goes for Council Tax. You’ll not pay the pre-bankruptcy debt but will pay for every day thereafter. If you share your property they will need to pick up the whole bill.
The trustee appointed whether the official receiver or an insolvency practitioner will have the task of realising the maximum amount of value from your property. Property includes anything that has a monetary value and does extend to property owned by your business if you have one.
There are however a few very important exclusions that you’ll need to know as there may come a time when you need to use this information. You are allowed to keep:
“tools, books, vehicles and other items of equipment which are necessary to the bankrupt for use personally by him in his employment, business or vocation” in addition to “clothing, bedding, furniture, household equipment and provisions” necessary for satisfying the basic domestic needs of you and your family.
However, there are conditions and those conditions centre around how valuable the property that falls into the above groups can be. A rule of thumb which is frequently used is £500. So if you have a car which is worth more than £500 that you use for work, chances are you’ll need to sell it and get one for £500 or less and give what’s left over to your trustee. If your trustee tries to bend these rules push back – hard!
Once your property is realised, should you need to answer any further questions your trustee has or if your income or circumstances change and you acquire money or possession, you’ll need to tell them for up to 3 years after being made bankrupt.
This article was written by Sarah Sperring
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