Bankruptcy

Someone you owe money to (a creditor) can apply to make you bankrupt but must be owed at least £5,000 to do so.

However If you have a debt problem you can apply for your own bankruptcy online (www.gov.uk/apply-for-bankruptcy).  Your application will be considered by an ‘adjudicator’ being someone who works for the Insolvency Service who will decide if you should be made bankrupt.

A fee of £680 will be payable to make yourself bankrupt online which can be made in instalments but your application will not be processed until payment has been received in full.

Within 28 days of submitting your application you should receive notification from the adjudicator advising if you have been made bankrupt.  If so a bankruptcy order will then be issued.

The Official Receiver becomes the receiver and manager of the bankruptcy estate following the order. In some cases the Official Receiver may pass the management of your case over to a licensed insolvency practitioner.

Bankruptcy positives

  • You will be completely cleared of many debts but not damages for personal injuries; family liabilities, such as maintenance arrears; liabilities under criminal law, such as fines or frauds; student loans; and some benefits among others
  • You can be discharged in as little as a year but if you have previously been made bankrupt then discharge could take longer
  • You might not have to make any payments unless an income payment order is made

Bankruptcy negatives

  • People could find out, as the bankruptcy will be publicly advertised
  • Any business you own may be closed down and the staff fired
  • You will lose valuable assets, including your home, if a partner does not buy your share
  • You lose any assets you gain during the bankruptcy, such as a legacy, insurance settlement, ENDOWMENT PPI CLAIMS or endowment
  • If you rent, your landlord will be told and the tenancy may be terminated, depending on your lease
  • All your bank, building societies and credit card accounts will be closed. YOU MAY have to retain one bank account with the trustee in order to pay bills.
  • Luxuries or expensive items you have leased or bought on HP may have to be returned to the owner
  • The bankruptcy remains on your credit history for at least six years, making it difficult for you to borrow money after you have been discharged
  • The trustee can ask the court to make an income payment order, which is the amount you must pay each month towards your debts
  • Bankruptcy fees are added to your debts
  • If you are guilty of misconduct while bankrupt, a bankruptcy restriction order (BRO) or bankruptcy restriction undertaking (BRU) may be taken out against you – these restrictions apply after you have been discharged and can last for up to 15 years
  • Bankrupts cannot do some jobs, for example, being a company director, a councillor or a member of parliament
  • Some debts, such as court fines or child maintenance, are excluded from a bankruptcy – AS ARE STUDENT LOANS.
  • If you have joint debts, the other person may still be pursued