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Anyone can go bankrupt. You are likely to be declared bankrupt if you have many debts that you simply cannot afford to repay.
Bankruptcy is declared to free you from unmanageable debts. It should help you to legally make a fresh start prevent you sinking further into debt. The aim of Bankruptcy is to share out your remaining assets fairly and legally among your creditors to help them recoup the debt you owe them.
If you should disagree with a predicted bankruptcy order you should try to come to some agreement with your creditors before a petition has been presented, otherwise it can be very expensive to fight the petition, it is in your own interest to cooperate. A Court will decide whether a bankruptcy order should be met after a bankruptcy petition has been presented.
| by yourself, which is called a debtors petition |
| by one or more creditors who are owed at least £750 by you. If this amount is unsecured they can present a bankruptcy petition against you. This is called a creditor’s bankruptcy petition |
Bankruptcy petitions are presented at any county court near to where you live and a local Official Receiver will deal with it. Even if you are not in the country at the time a petition can still be bought against you. If you have had residential or business connections in England or Wales within the last 3 years a bankruptcy petition can be brought against you.
The Official Receiver is responsible for administering your bankruptcy and protecting your assets from the date of the bankruptcy order. The receiver will look into your financial affairs before and during bankruptcy, they will report to both the court and your creditors. They will look for any criminal or dishonest behaviour in connection with your bankruptcy.
The Official Receiver will act as trustee of your bankruptcy estate, unless an insolvency practitioner is appointed. An Insolvency Practitioner (an individual who specializes in insolvency work) can be appointed trustee instead of the Official Receiver. They must be authorized by either the Department of Trade and Industry or the appropriate professional body.
The Official Receiver will notify all organizations of the bankruptcy. Any person or organization who can provide any details of any assets or liabilities you have will be asked to do so. Utility suppliers, land registry, national savings, courts, bailiffs, banks, pension suppliers, landlords will all be asked for information which may affect the bankruptcy.
| Provide information about your financial affairs. Your Official Receiver may send you a questionnaire that you must fill out fully, and they may also want to interview you at their office. |
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You will have to supply a list of all your assets and all details of what you owe and to whom. |
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You will have to hand over all your books, records, bank statements, insurance policies and anything else relating to your financial affairs. |
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Your Trustee should be made aware of any income or redundancy payments you incur or any property that becomes yours or inherit during your bankruptcy |
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You will not be allowed to use such things as your bank, building society, credit card and similar accounts during bankruptcy. |
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You will not be allowed to obtain credit of £500 or more from any person without first disclosing the fact that you are bankrupt. |
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You will not be allowed to make payments directly to your creditors during bankruptcy proceedings, without firstly consulting your Trustee or Insolvency Practitioner. You must pay any continuing commitments such as rent (if you rent your home), and any debts you incur after the bankruptcy. |
On the third anniversary of your bankruptcy you may be asked to pay the courts fee, some courts will waver this if for instance you are claiming income support. You will have to pay a deposit towards the administering of the bankruptcy. If you are a married couple both applying for bankruptcy you will have to pay separate fees, unless all parties have applied for a joint bankruptcy petition.
If you want to declare yourself bankrupt you should contact your local Court. They can give you the name, address and telephone number of the nearest County Court that deals with bankruptcy. The Court will either hear your petition straight away or arrange a time for the Court to consider it.
| If the court decides it needs further information before it can make any decision it will Stay (delay) proceedings. |
| The court may decide to dismiss the petition and may decide an administration order would be more appropriate. |
| The court may decide to appoint an Insolvency Practitioner - the Court thinks that an Individual Voluntary Arrangement would be more appropriate. If you do not wish to enter into such an arrangement, you should inform the Court. |
| The court may make a bankruptcy order. You will be declared bankrupt the moment the order is made by the Court. |
If your unsecured debts are less than £20,000 and in the previous 5yrs you have not been bankrupt or made an Individual Voluntary Arrangement with your creditors, then the administration of your bankruptcy should be quick and simple. The court will issue a Certificate of Summary Administration. The official Receiver will be your Trustee. You will be freed or discharged from bankruptcy between one and two years from the date of bankruptcy order.
If the above conditions are not met a Certificate of Summary Administration will not be issued and your discharge from bankruptcy will take three years from the date of the bankruptcy order
Bankruptcy will be registered with credit reference agencies and will remain on your file for six years. Even after this time you may have to declare your bankruptcy if applying for a mortgage.
If you have been declared bankrupt before, within the last 15 years, you will not be automatically discharged. You will only be able to apply to the Court for a discharge 5 years after the date of your current bankruptcy order; even then the Court may refuse or delay discharge.
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