Frequently Asked Questions

Once an individual declares personal bankruptcy the majority of their debts are written off. There are some exceptions to this. Read our section on "What debts are written off" to make sure this is the case for you.

Bankruptcy is not as stigmatised as it used to be. In most instances bankrupt persons are not advertised in the local press any more unless it is a public interest case. To find out what happens to your information, read our section on publicity.

Property: If your home is in negative equity and you are considering bankruptcy, it is likely that you will be able to remain in the mortgaged property as long as you maintain mortgage and secured loan payments. You will need to confirm with the official receiver that you want to obtain the beneficial interest in the property. There is a simple and straightforward process involved with this and it is standard practice among Official Receivers. If you have significant equity in your home and you enter bankruptcy, your property might be at risk. However, the process is slow (it usually takes 12 months) and a number of options will be presented before the actual repossession procedure commences. Among these might be an agreement whereby a 3rd party purchase your share of the equity in the property. This is very common with properties that are jointly owned. Read our section titled "Will I lose my home?".

Vehicles: In order to retain a vehicle in bankruptcy, you must be able to demonstrate that is a necessity. Usually, the vehicle would not have a value of more than £2000. In situations where a vehicle is owned and its value is significantly more than this figure, it could be sold and replaced with a cheaper vehicle. The same applies with commercial vehicles, especially if that vehicle is used as a tool of your trade. Read our section on "Will I lose my car?".

The most common household goods in your home are safeguarded during the bankruptcy process. Read our section on "Will bailiffs take my property?" It is luxury items and valuable electronic equipment that could be taken and sold. The rule of thumb is to have what you need and no more.

Once declared officially bankrupt, an individual's creditors must and are duty bound, to cease all actions as the debts are now expunged. This often comes as a tremendous relief to the majority of people as they begin to take control of their lives again. The main objective should always be to start again and adjust lifestyles so that the bankrupt person does not return to the same situation, with unmanageable debts, again.

There is no easy answer to this question. Every individual is unique with differing circumstances. Therefore, to blanket a yes/no approach to this question would be a huge disservice.

However, there is one statistic that cannot be ignored. All too often people who would benefit greatly from the protection of going bankrupt dismiss the idea, simply due to an inherent lack of knowledge. Their fear of the "stigma" of bankruptcy causes a kneejerk reaction that prevents them from making the right decision.

Only 1 in 5 individuals who are in debt seek help and assistance with their problems. We are at a loss, on occasions, when we speak to people who let their fear of the stigma paralyze their ability to make a sensible decision. Do not fall victim to this. Read through all the information we have provided thoroughly, and then make an educated and balanced decision for yourself. Make a list of questions on paper, or even write down your fears. Discuss these with an insolvency practitioner. For most people that face crippling debts, the choices they make at this point affect their entire future. Make sure your choice is the right one. It is your future you are deciding here.

• Court fines
• Debts due to the Child Support Agency (CSA)
• Student loan debts
• State benefit overpayments
• Secured Debts
• Awards for damages and fraud

Until recently, the name and address of anyone who had been proclaimed bankrupt would be published in the local paper. However, following the Insolvency Amendment Rules 2009 (Made effective on April 6th 2009) your name no longer appears in the local paper unless there are exceptional circumstances. The official receiver is only allowed to advertise names based upon the following rules.

1) When there has not been a full disclosure of relevant financial affairs.

2) Where there has been a high level of complaint or public concern in the local community.

This means that unless you have been dishonest in your bankruptcy petition or are a business that has had complaints made against you, then your name simply cannot appear in the local paper.

As with all insolvency solutions (such as an IVA), your name is placed on the insolvency register. This is available to anyone online. In bankruptcy your name is removed from the register 3 months after you are discharged.

If you own a home, either solely or jointly, the interest in the property - mortgaged or otherwise - will form part of your bankruptcy estate. If your home is in negative equity and you are considering bankruptcy, it is extremely likely that you will be able to remain in the property provided you maintain mortgage / secured loan payments. The latest ruling is that the property's value is to be reassessed after a period of 27 months – if there is still no equity at this stage, the Official Receiver will give up his interest in the property. Once this happens, the case cannot be revisited at a later date (if the market were to suddenly pick up again).

If you have significant equity in your home and you enter bankruptcy, your property might be at risk. However, the process is slow (it usually takes 12 months) and a number of options will be presented before the actual repossession procedure commences. Among these might be an agreement whereby a 3rd party is allowed to purchase the Official Receiver's interest in the property. We have known cases where a sale is not enforced regardless of the amount of equity in a property – the Trustee might simply place a charge against the property and allow the bankrupt to remain in the property.

If you have been experiencing financial difficulties, your credit rating may already be affected. By addressing your financial issues head on, you are taking the right step in improving your situation, and your future credit rating. Although at first you will find it difficult to gain credit, in time you will see an increase in your rating. Once you have been discharged, your credit file will show that you are a discharged bankrupt for 5 years.

The Official Receiver is a civil servant and an officer of the Court. He is responsible for administering bankruptcies and will act as a Trustee of your estate unless a private sector Insolvency Practitioner is appointed.

One of the Official Receiver's main duties is to investigate your financial affairs for the time before and during your bankruptcy.

An Insolvency Practitioner can be appointed Trustee instead of the Official Receiver. They must be licensed and are usually accountants or solicitors. The Insolvency Practitioner is then responsible for the disposing of your assets and making payments to your creditors.

When a bankruptcy order has been made, you must provide the Official Receiver with information relating to your financial affairs, such as a list of your assets (property, pensions, insurance policies etc), outstanding amounts of each debt and to which creditor they are owed (the petition we have prepared for you.)

Any assets are then to be handed over to the Official Receiver, along with any bank statements and insurance policies relating to your property and financial affairs.

Any assets and income increases obtained during the bankruptcy should be declared to the Trustee.

You must not obtain credit of £500 or more from any person without first disclosing the fact that you are bankrupt. You must not make any direct payments to your creditors.

A bankrupt may be discharged (freed from obligations under the bankruptcy order) in one year or less from the date of the bankruptcy order.

Discharge releases the bankrupt from most of the debts owed at the date of the bankruptcy order. Exceptions include debts arising from fraud, certain crimes and fines. Certain other debts such as damages or personal injury or money owed under family proceedings (such as maintenance) will be released only if the Court agrees.

The good news however is that in 99% of cases you will be debt free in one year or less.

Not necessarily. If you bank with a bank or building society you have debt with the likely hood is, yes you will lose it. However, some banks have stated they will give bank accounts to people in a bankruptcy order, or planning to go bankrupt.

Most IVA companies require at least 4 months of missed payments to terminate the contract they have with yourself and the creditors. An Insolvency Practitioner is likely to lose money if you leave the IVA so they will try to 're-sell' you back on to the IVA. We would suggest a nicely worded letter advising of your change in circumstances, stating that you would like to discontinue with their services.

First you need to establish if they are Bailiffs or just debt collectors as there is a big difference. A bailiff is a court ordered collector who is sent to collect money, or goods to the value of the debt, whilst a debt collector has no right what-so-ever to enter your property, even if you invite them in (we advise you do not do that either). You must have received a letter from the courts (not just a letter threatening court procedures) before a bailiff can enter your property. A Bailiff cannot enter your property unless you invite them in. Once you have invited them in or if they can gain unforced entry via an open door or window for example, then they can return to court to obtain an order to enter with police and a locksmith. Try contacting the council or courts to set up a payment arrangement if you are really worried.

Bankruptcy will show up if someone credit checks against your name at the address you live at. However, other people at your address should not be affected by you going bankrupt, as the credit check is against the individual not the address.

This really does depend on your current income and expenditure. Most people entering into a bankruptcy order have very little choice but to go bankrupt as they have little money left at the end of the month. If once you review your income and expenditure, you see that you have more than £99 left after all bills and necessary payments are made then you could have to pay an Income Payment Arrangement (IPA) which is organised with the official receiver (trustee). The IPA will only be a percentage of your disposable income (money left over).

Unless you are contractually obliged to tell your employer (check your contract) then you do not have to tell them. You may find that whilst you are bankrupt (up to one year in most cases) you will not pay tax and your pay slips show 'nil tax' where your tax usually shows.

Your tax is paid to your official receiver (they will advise you of how this will work) and they will pay it to your creditors. Do not panic, there are many reasons why 'nil tax' is awarded and your HR department would not be told of the reason it has been changed.

If you are currently in receipt of a state pension it becomes an income and is not taken from you. Since 2000, a pension does not normally form part of the bankruptcy estate, providing it is HMRC approved. Your official receiver may need to know if you can take out your pension at any time. We suggest discussing this with an insolvency practitioner if you are at all worried.