Summary
Bankruptcy isn’t nice but if you’re having to face it, it is best knowing the process and how it will effect you. This article will give you an indication of what ocurrs
If you have serious debt problems you could be deliberating bankruptcy. It’s crucial to grasp what bankruptcy implies and whether it is the right optionfor you.
What does bankruptcy mean? Bankruptcy is a provisional legal status. Whilst bankrupt, your non-essential assets such as possessions, property including excess income are used to pay some of your creditors. After the bankruptcy period has ended, most debts are discharged. This may be an effective system of clearing iva help you cannot pay.
What is the time limit for bankruptcy?. Bankruptcy on average lasts for one year. After this time, you will be ‘discharged’ from your bankruptcy regardless of the money you still owe. Discharge can occur earlier if you co-operate fully with the Official Receiver. Although, in a few cases and if you’ve behaved negligently, bankruptcy can last for much more than a year.
How do you become bankrupt? A court proclaims you bankrupt by issuing a ‘bankruptcy order’ after it has been given with a ‘bankruptcy petition’. In general this happens in one of two ways.
Filing your own bankruptcy petition. A debtor’s petition form can be can be downloaded off the computer from the Insolvency Service website or aquired from county courts with bankruptcy jurisdiction. The form must be completed and then taken to the nearest county court, that has bankruptcy jurisdiction. A fee of £150 and deposit of three hundred and sixty pounds is payable at this time. This amount cannot be ignored.
A creditor making you bankrupt. Your creditors can serve a creditor’s petition if you have an unsecured debt of more than 750 pounds. Once the bankruptcy proceedings have commenced, you have to co-operate wholly even though it’s a creditor’s petition and you contest their claim.
Where is a bankruptcy order made? Bankruptcy petitions are usually presented in a county related court near where you reside or trade.
Who would sort out your bankruptcy? After a bankruptcy order has been filed against you, your creditors cannot chase you for repayment. Payment of these bills becomes the responsibility of the trustee. An Official Receiver is assigned if you have no assets. If you are in possession of assets, an Insolvency Practitioner will be assigned to function as trustee and sell your assets to pay off your creditors.
What is the outcome when you become bankrupt?. When you are bankrupt, the Official Receiver, or selected trustee, can sell your assets to pay off your creditors. Although, selected goods are not treated as assets for this purpose, such as: required work equipment and tools and necessary household items such as bedding, furniture and clothing.
The Official Receiver can look at your income taking into consideration expenses and decide if payments should be made to your creditors. You may be required to sign an ‘income payments agreement’ to pay set monthly instalments from your income for two years.
Your obligations when you’re bankrupt. You are obliged: Give the Official Receiver details of your finances, creditors and assets, and hand them over to the Receiver with the appropriate paperwork, like insurance policies and bank statements notify your trustee of any new assets or income, for the duration of your bankruptcy cease using debit, credit cards or store cards, bank or building society accounts, do not apply for credit over 400 pounds without informing the creditor that you’re bankrupt, do not make payments direct to your creditors. You may also have to go to court and state why you’re in debt.
If you are deliberating declaring yourself debt free or you are being threatened with bankruptcy, it’s vital to get independent advice.