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Bankruptcy FAQ

  • What is bankruptcy

    Bankruptcy is a recognised method for individuals to deal with debts that they would otherwise be unable to repay. Bankruptcy releases a person from overwhelming debts and allows them to start again with a fresh slate. Anyone can go bankruptcy, including individual members of a partnership. If you are a company or a partnership business, then the insolvency procedures are slightly different. Declaring yourself bankrupt is not an easy decision and you should think very carefully before making the decision to move forward. We suggest you read through all of the information on this website then call us on 0800 5977 977 with more specific questions, which should enable you to make an informed decision
  • What are the advantages of going bankrupt

    Bankruptcy is often seen as the fastest and simplest way out of an unmanageable debt situation. 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 in the public’s best interests. 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 purchases your share of the equity in the property. This is very common with properties that are jointly owned. R ead 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 £1000. 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. 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?” 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 the lifestyle  so that the bankrupt person does not return to the same situation.
  • Is Bankruptcy right for me

    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 bankruptcy dismiss the idea out of hand, 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, then call us on 0800 5977 977 with any other questions. Make a list of questions on paper, or even write down your fears, then speak to us about them. For most people with crippling debts, the choices they make at this point affect their entire future.
  • What Debts Are Written Off

    Most debts are written off in bankruptcy. However, there are some exceptions. Listed below are the debts that are excluded. Court fines, Debts due to the Child Support Agency (CSA) Student loan debts, State benefit overpayments (in some cases) and debts as a result of criminal activity
  • Is My Name Made Public

    Until April 2009, the name and address of anyone who had been declared bankrupt would have been published in the local paper. However, following the Insolvency Amendment Rules 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.
  • Will I Lose My Home

    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.
  • How will my credit rating be affected

    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. On a more encouraging note, many of our previous clients have been able to obtain credit as soon as 14 – 16 months after discharge.
  • What is the Bankruptcy process

    A Court makes a bankruptcy order only after a bankruptcy petition has been presented. As you would be petitioning your own bankruptcy you would have your court date booked by ourselves or organized into a ‘walk in’ court. You will be asked to give your petition (provided by us) to a bankruptcy clerk. Please be aware that the Bankruptcy court is not an open court, and you will not be asked to stand in front of a jury. In most cases, people do not even see a Judge for bankruptcy and even if you do, it will be in a private office.
  • Who deals with bankruptcy cases

    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.
  • What are the duties of a bankrupt

    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 details of any 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.
  • How long does Bankruptcy last

    A bankrupt may be discharged (freed from obligations under the bankruptcy order) in 12 months 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.
  • Will I lose my Bank account

    Not usually in this day and age, unless you have debt with the bank in question. There are now several banks that have no problem at all with bankrupts, as these are. after all, the clients of the future – bankrupts have no debts! Call us on 0800 5977 977 to find out more.
  • If I am in an Individual Voluntary Arrangement, how do I come out of it

    The first step is to stop paying the IVA immediately and advise the IVA company in writing that you are exiting the IVA. You will receive a letter of default after three missed payments and a letter of termination two months later, which is required by the court. An Insolvency Practitioner is likely to lose money if you leave a IVA and might try to ‘re-sell’ you back in to the IVA. To avoid this, simply stop all contact once the letter has been sent. We will write to the IVA company on your behalf and sort this out for you. Taking people out of IVAs and placing them into the protection of bankruptcy is our speciality.
  • Can Bailiffs come into my house

    The short answer to this is ‘No’, the bankruptcy procedure does not result in Bailiff activity – period. In the lead up to the bankruptcy, you may be under threat, particularly if you ignore County Court Judgements or have a Liability Order for non-payment of Council Tax against you. 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, 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.
  • Will bankruptcy affect my address

    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 your bankruptcy, as the credit check is against the individual and not the address.
  • Will I have to pay any more money after I am Bankrupt

    This really does depend on your current income and expenditure. Most people entering bankruptcy have little choice in the matter as they have little money left at the end of the month. This is arguably the most important part of the service we offer,as it is imperative that you claim the legal allowable limit for all expenses. We have the latest limits and have an outstanding track record in helping people avoid having to pay anything after bankruptcy (known as an Income Payments Arrangement or IPA).
  • Does my employer have to know I have gone bankrupt

    Unless you are contractually obliged to inform your employer (check your contract) then you do not have to tell them. You may find that while you are bankrupt (up to one year in most cases) you will not pay tax and your pay slips will show ‘nil tax’ where your tax usually shows. Your tax is paid to the 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.
  • Will I lose my pension

    As of January 2015, pensions are 'ring-posted' in bankruptcy and do not form part of the bankruptcy, provided they are HMRC approved. There was a recent move by the Insolvency Service to force those approaching pensionable age i.e. 55 to draw down their pensions to settle part or all of the debt, but this was rejected by the High Court.
  • What assets will I lose

    If you have a vehicle, stocks, shares, premium bonds, property in positive equity, money in savings accounts, buy to let properties or any large amounts of cash, you will lose all or some of these in a bankruptcy. Please tell us if you have any of these. However, if your vehicle is worth less than £1,000 and you need it for work then you will be allowed to keep it.
  • Some of my debts have occurred through gambling

    In some cases, debts caused by gambling can lead to a bankruptcy restriction order. It is advisable to discuss this with us before proceeding.
  • Does my pension form part of my income

    Yes it does. Pensions are treated as 'earned income' and will be added to any part / full time employment in assessing whether you have surplus income. Although this will hardly effect most people, there are those receiving private monthly pensions in excess of £800 per month and this is treated in exactly the same way as if you had a salary of the same amount. People receiving state pensions only will not be affected. Call us if in doubt.
  • What is an Income Payments Agreement (IPA)

    An Income Payments Agreement (IPA) occurs when it is determined that you have surplus income after all of your expenses. The Official Receiver will place you in a 36 month IPA and this money will be used to cover the Insolvency Service's costs in administering the bankruptcy and to distribute among your creditors. As the name implies, it is an agreement and you have the right to negotiate, but if both parties cannot agree on a figure it will be taken before a Judge, who will arbitrate. If this were to happen, it would no longer be an IPA but an IPO (Income Payments Order). This is a very good reason to seek professional assistance when completing your Income and Expenditure, as IPAs are often avoidable.
  • Can I include foreign debt in my bankruptcy

    Yes you can, but please note that EU debt and debt from countries outside the EU e.g. USA, is treated differently. There are agreements in place among the EU member states that oblige each member to observe the other's creditors. What this means is that credit card debts, loans, overdrafts and mortgage shortfalls in say, Poland, will be liquidated in a UK bankruptcy. You may include debt from countries outside the EU, but they are not obliged to observe the bankruptcy and the debt may well remain in place. However, the creditors would not be able to pursue you for the debt provided you remained in the UK.
  • Will I keep my car

    The rule here is that vehicles up to the value of £1,000 may be kept provided they are needed for work. If you had a car worth, say, £3,000 you would be given the choice of either paying the OR the difference (£2,000) and keeping the car or allowing it to be sold and be given £1,000 (by the OR) to buy a replacement. It is unlikely that a car on finance will be allowed, though we have known exceptions.
  • Can I leave the UK after bankruptcy

    Yes you can and we have even had cases where the individual left for Australia the following day. The key to this being successful is providing a telephone number where you may be contacted by the Official Receiver. If the OR cannot locate you, the case will simply be suspended until such time as everything has been sorted out. If your case is complicated it might be best to postpone matters for a week or two, as the OR might wish to interview you.
  • Which bank will give me an account

    Provided you have no debt with a bank, most will allow this. However, both the Barclay's Cash Account and the Cooperative 'Cashminder' account have long been regarded as the safest options, though please note there are monthly admin fees associated with the latter.
  • Can I include Council Tax in my bankruptcy

    Yes you can, but if there is a Liability Order in place and Bailiffs have already set up a payment plan, you might have to honour this. Even the Insolvency Service is a bit hazy on this one as there is provision in the Statement of Affairs (form 6.28) to report any arrangements with Bailiffs. Let's just say that in 98% of cases you will get away with it, as once the letter from the Insolvency Service reaches the Bailiffs they tend to back off.
  • Does my tax code change

    For employed people there is a good chance that your tax code will change to NT (no tax) until the end of the current tax year. Your payroll dept. is advised of the code change but not given a reason and you will be paid gross of tax i.e. no tax taken, until further notice. You will be given instructions where to pay the amount you were paying towards tax. If your bankruptcy takes place around late February or March, there is a very good chance that this will not happen due to time constraints.
  • Do I see a Judge when I go to court

    In most cases people do not see a Judge but simply hand the paperwork to a Bankruptcy Clerk who takes it through to a Judge to be signed. You would either wait or be asked to return in an hour to pick up the certificate. In some cases a Judge might ask to see you, but this is usually to confirm that you have taken professional advice and it is always in a private office - not in open court.
  • Can I include HMRC tax and VAT in my bankruptcy

    Yes you can. In fact, the majority of our cases involve tax and VAT owed to HMRC. The reason for this is often that HMRC insists on any payment arrangement being concluded within a 12 month period and most people simply cannot cope. You may include any amount due up to and including the date of the bankruptcy.
  • Could I be discharged from bankruptcy earlier

    People are automatically discharged from bankruptcy after 12 months, but it is often the case that people are  discharged after 6 - 8 months especially if it is clear that their circumstances will not change. Examples of this might be people on Disability, pensioners or long term sick and unemployed. We have known cases where people have been discharged after four months, especially pensioners.
  • Can I go bankrupt more than once

    Yes you can and a number of our cases are repeats. People fear the worst second time round as they feel a 'Bankruptcy Restriction' is likely, whereby the person would not be discharged from bankruptcy for several years.  However, this is rarely the case unless extreme negligence is involved e.g. gambling issues / risk taking.  Provided there are reasonable circumstances, nothing will come of it. After all, Donald Trump is on his fourth bankruptcy and no one is rapping him over the knuckles!
  • If my property is going to be repossessed should I first wait for a sale

    No, as it will be included in the bankruptcy as a 'foreseen debt' and you will not be liable for any shortfall regardless of how long it takes to sell. The Official Receiver will write to the mortgage lender and ask for the final figures to be advised when available.
  • Will my name appear in the local newspaper

    No, the Insolvency Service stopped publishing names in local newspapers in 2009. The only possible exception might be if a trader had multiple creditors from a particular area - in this case it might be perceived as being in the best interests of the community to publish details.
  • How long is my name on the Insolvency Register

    Whenever someone enters an IVA, Debt Relief Order or Bankruptcy the details are entered onto the Insolvency Register, which is a public record of all such court sanctioned debt arrangements. Informal arrangements like Debt Management Programmes or payments which are arranged directly with a creditor, do not appear on the register. The record stays on the register for a total of 15 months, then drops off. Anyone can access the Insolvency Register as it is in the public domain. The only exception is if somebody is placed in a Bankruptcy Restriction, in which case it will remain on the register until the restriction is satisfied.
  • Can I still claim PPI after bankruptcy

    The short answer to this is 'No' as the PPI is described as a 'Bankruptcy Asset' and forms part of the Bankrupt Estate and you would be obliged - as would the bank concerned - to pay over any proceeds to the Official Receiver. Having said that, we know of plenty of people who have succeeded in claiming and banking PPI from the past with nary a query from the bank or Official Receiver.
  • Will I be able to keep my car on hire purchase

    We have known of cases where this has been allowed, but in most cases the vehicle is lost. The main reason for this is that the Official Receiver will view your car payment as an avenue to place you into an Income Payments Agreement (IPA), whereby you contribute a monthly figure towards compensating your creditors. Your chances of keeping the car would increase markedly if your employment was directly affected by you losing the vehicle e.g. if you needed the car / van for your work, as the OR cannot be seen to make any decision that affects your ability to make a living.
  • What is a Liability Order

    A Liability Order is the 7th and final step a council will take when it cannot collect Council Tax arrears. The council approaches the court to officially recognise the debt and it opens the way to all manner of nasty things including attachments of earnings, reducing benefits and the worst of all, county court Bailiffs. The latter pull no punches when it comes to collecting council tax, as it is viewed in such a serious light. If you are having difficulties paying council tax pick up the phone and ask for an arrangement, but don't ignore the problem. It is possible to include council tax arrears in a bankruptcy, but if a Bailiff has made a payment arrangement with you following the issuing of a liability order, you might still have to honour it.
  • What jobs are affected by Bankruptcy

    Surprisingly few, actually. Financial Advisers, Mortgage / Stock Brokers, Solicitors and Managing Directors will be affected, but unless it is specifically mentioned in your contract, you have nothing to worry about. NHS staff, office workers, retail, factory staff and many other 'everyday' professions are not affected. Call us if you want more information.
  • Can I be self employed when bankrupt

    Yes you can operate as a sole trader, no problem. It is only company Directors that have to stand down. You just need to be aware of the restrictions if you intend borrowing money i.e. if you borrow more than £500 you need to advise the bank or company offering the credit facility that you are bankrupt. Otherwise, you can keep trading as before.
  • Is a UK bankruptcy valid in Norway

    The short answer to this is No. Norway is not a member of the EU which means that the cross border cooperation which exists between EU member states when it comes to writing off debt, does not apply. However, if you went bankrupt in either England or Wales, Norwegian companies would not be able to pursue you while living in those countries.
  • What is a Statutory Demand

    This is a formal demand to settle a debt exceeding £750 within 21 days, or bankruptcy will follow. If the amount or indeed, the debt, is disputed any further progress re the bankruptcy will be delayed until the dispute is resolved.  Some companies use Statutory Demands as a means of 'spooking' clients into paying outstanding amounts - in other words, a bluff - but if you were to receive one from HMRC the threat is very real. Suffice it to say, if you were to receive one through the post, you would need to act one way or another.
  • Can people on benefits go bankrupt

    Yes, there are no restrictions re your work status and, in fact, it can be a good time to proceed as a) there is no threat of an Income Payments Agreement (IPA) and b) you would probably be exempt from having to pay the £180 court fee. People with good incomes face the prospect of a 3 year IPA if it is found there is surplus income after all expenses and it is important that advice be taken to avoid this from happening.
  • Do I pay court fees if I am on benefits

    It is very likely that you will not have to pay the £180 court fee, provided you have completed form EX160 and can produce a benefits letter no more than 30 days old. However, there are no exceptions to paying the Official Receiver's fee of £525 in cash on the day. We have provided details of a number of companies / charities that will assist with this cost elsewhere on this website, but certainly EDF and British Gas are among them.
  • Can I go bankrupt from abroad

    The short answer to this is Yes, but it's complicated and expensive. The reason why it is expensive is that, in addition to the extensive paperwork, the case has to be presented in the High Court in London and that means a full day out of the office and possible overnight accommodation. However, provided you have UK / EU debt, we see no reason why you shouldn't proceed. Please note, this can only be done for those persons who have been out of the country for between six and 36 months.
  • What happens when I get to court

    On the day of your bankruptcy hearing you should have three copies of both the Debtor's Petition (form 6.27) and the Statement of Affairs (form 6.28), as well as the court fees in cash. If you think you might qualify for a remission of the actual court fee (£180), then you should have completed a form EX160 as well (people on benefits, low income, etc.). You would hand all of these documents to the Bankruptcy Clerk, who will arrange to take them through to a Judge for signature. You will either be asked to wait until the documents have been signed or to return in 45 minutes, to collect the Bankruptcy Order. In some cases, the Judge might want to see you, but this is usually only to confirm that you have sought professional advice and it is always in a private office. It is possible that a representative from the Official Receiver's Office will be at court, in which case arrangements will be made for them to contact you for a telephone interview at a later date. Best of luck.
  • Will I lose my rented property

    This question comes up often, as people believe that their Landlord will terminate the lease. If you feel there is a genuine risk of this happening, take a copy of your lease to court on the day of the bankruptcy and hand it in with the rest of the paperwork. Although Official Receivers do advise Landlords of your status, they will not do this if the lease is clearly in place. Our experience is that Landlords rarely take action anyway, especially if the tenant is a good payer and reliable.
  • What is the minimum amount for which I can go bankrupt

    There are no guidelines as to a minimum amount if you are doing your own bankruptcy, but if a creditor wishes to make you bankrupt the minimum is £750. Having said that, a Judge is unlikely to sign off a personal bankruptcy if the amount is less than £15,000, unless it is absolutely clear that all other debt solutions - especially a Debt Relief Order - have been explored. The courts now routinely ask if people have taken professional advice prior to applying for bankruptcy and if they have not, the case will either be rejected or deferred.
  • What is a Bankruptcy Restriction

    A Bankruptcy Restriction is usually imposed when dishonesty has been revealed in the Official Receiver's investigation of your affairs. This means that your Bankruptcy is extended by one to several years, depending upon the seriousness of the matter. Failure to disclose assets, fraud, channeling money through other people's accounts, running up debts where there was no real prospect of ever being able to repay them, gambling and general non-cooperation with the OR will not help matters. Best to play it straight with the Official Receiver.
  • What debts cannot be included in a bankruptcy

    There aren't many, but they might be listed as follows:
    • Marital settlements
    • Unpaid court fines, with the exception of parking fines i.e. non-criminal
    • Student loans
    • Child maintenance payments (CSA)
  • Can I do anything to remove a bankruptcy from my credit report

    Not usually, but there is one exception: if by some chance someone came up with an amount that the OR was happy to accept in full settlement, the bankruptcy would nullified and all trace of it would be removed from your credit file. It would be as if it had never happened in the first place. But for the rest of us, it remains on your credit file for six years.
  • Can I get a mortgage after bankruptcy

    The answer is yes, but there are conditions. We have it on good authority that it is possible to get a mortgage 36 months after discharge provided there has been no trouble in the interim. Secondly, you would probably need a minimum 25% deposit.
  • Are the bankruptcy rules in Northern Ireland the same as England or Wales

    The answer is 'No' but they are very similar and the bankruptcies are conducted in Belfast using a procedure that is unique to that area. The paperwork is also different, but similar. Our enquiries revealed that the allowances are, in fact, more generous than those in place for England or Wales e.g. you can keep a vehicle up to the value of £4,000 in a Northern Ireland bankruptcy, whereas the limit over here is £1,000.
  • What happens to joint debts in bankruptcy

    When you enter into credit agreements in the UK, both parties are 'jointly and severally' liable, which means both parties are liable for the full amount and not half each. Therefore, if one party went bankrupt but not the other, the remaining party would still be responsible for the full amount.
  • Can anybody living in the EU go bankrupt in England

    The short answer to this question is 'Yes' but the criteria are becoming harder to satisfy year by year. As England and Wales have the most lenient bankruptcy laws, it is understandable that someone living in Germany might want to file for bankruptcy here, but this has lead to a phenomenon known as 'Bankruptcy Tourism'. Now the courts take a long hard look at every case to ensure that the individual is here to stay. Bankruptcies involving mainly foreign debt are not granted on the day of the hearing, but referred to the Insolvency Service which examines the available information. They would be looking for things like National Insurance Numbers, local bank accounts, being registered on the electoral roll, children attending local schools, etc. Call us if you want more information as we have helped countless foreign nationals file for bankruptcy in the UK.
  • Does my tax code change when I go bankrupt

    For employed people, their tax code changes to NT (No Tax) until April the following year. Your Payroll Dept. will be advised of the change, but will not be given a reason and you will be paid gross of tax and instructed where to pay this tax (you don't get away with it!). The reason for this is that the Insolvency Service uses some of the money to offset its costs and distributes the rest among your creditors. This might sound complicated, but it's a fairly seamless procedure and doesn't inconvenience people too much.
  • Does bankruptcy always last 12 months

    No, there are many cases where people are discharged earlier and this is especially the case as regards Pensioners, people on DLA, long term unemployed and other cases where the circumstances are unlikely to change. We have known cases where people have been discharged after just four months, but plenty of others where discharge has taken place after 6 - 7 months.
  • Do I need to attend court for bankruptcy

    Yes you do, as there are affidavits to be signed. In cases of people going bankrupt from abroad, a Power of Attorney is required and all manner of supporting documents, but these are the exception and for everyday cases there is no getting out of it. But don't lose too much sleep over it - in most cases, people never see a Judge and even if they do, it is always in a private office and usually to ask if they have received professional advice.
  • What is a Warrant of Execution

    A Warrant of Execution is a writ which entitles a County Court Bailiff to visit a debtor's premises with a view to collecting goods to sell. It entitles a creditor to restitution on amounts of between £50 and £5,000. Should the amount sought exceed £600 it can be enforced in the High Court using a writ of Fieri Facias (often referred to as a Fi Fa). Upon issue, the court will transfer the case to the debtor's local court and write to the debtor informing him/her of the warrant. The debtor has seven days to pay the amount of the warrant without further action. Should the defendant pay within this time, the warrant is cancelled and the money is sent to the creditor by the court.
  • I can no longer afford my IVA – should I go bankrupt

    The short answer to this is 'Yes' especially if your debts amount to more than £15,000. When you exit an IVA prematurely the creditors are advised of your status and the calling and letters will start all over again. The annoying thing about this is that you were probably better off entering bankruptcy in the first place, around 70% of people are. Also annoying is that the IVA company will have taken the first 20 payments you made towards the IVA for themselves, to cover their costs and set up fees. Taking people through the IVA to bankruptcy process is our speciality. Call us and we'll tell you more.
  • Are all pensions safe in bankruptcy, even Sipps

    Provided the pension is approved by HMRC it will be safe in bankruptcy and that includes Sipps. There was a court case recently where the Insolvency Service was seeking to oblige those at pensionable age i.e. 55 to draw down part of their pensions to pay to their creditors, but this was thrown out by the High Court.
  • Do I lose my home in bankruptcy

    If there is no equity in the property, then No - provided you maintain mortgage payments.  The Official Receiver will review the equity situation 27 months later and if the position is unchanged i.e. still no equity, will release his interest in the property. But what if there is equity after 27 months? The OR will invite either you or a 3rd party to 'buy his interest' in the property for a to-be-decided sum. If this is not possible for some reason, the likely outcome is that a charge will be placed against the property, to be redeemed upon its eventual sale.
  • When is my name removed from the Insolvency Register

    Bankruptcy is removed from the Insolvency Register three months after you have completed the 12 month bankruptcy. For those who don't know, the Insolvency Register is a record of all court-sanctioned debt arrangements i.e. Debt Relief Orders, IVAs and bankruptcies. It is in the public domain and can be accessed by anybody by simply Googling the word and searching by 'all courts in England and Wales'. Some people confuse The Insolvency Register with an individual's credit file and believe it stays on there for six years. It doesn't.
  • How do I leave my IVA

    The first thing to understand is that you have the right to leave an IVA just as you had the right to enter into it in the first place. Once you have made the decision to leave, stop paying it immediately and cancel any direct debit. If you are unfortunate enough to be with Freeman Jones and have set up a Think Banking account (which they control), you will need to open a new bank account and redirect your wages. The procedure from here is that you will receive a letter of default after three missed payments, followed by a letter of termination roughly two months after that. You will need the letter of termination to show the court if you enter into bankruptcy. Our speciality is taking people out of IVAs and into bankruptcy. Call us for a chat.
  • How much does it cost to go bankrupt

    Assuming you don't qualify for a rebate of the court fee (£180), the total cost is £705 (the Official Receiver's fee is £525). You might be exempt from paying the court fee if you are in receipt of ESA, Income Support, Pension Credits or Working Tax Credit (but not if also receiving Child Tax Credits). You might also be exempt if your income is below the various thesholds e.g. a single person with one child earning less than £15,930 might be exempt from paying the court fee. If in doubt, call your local county court. If they say you do qualify, ask them to send you a form EX160 or download it online. You will need to take this to court on the day of the bankruptcy, plus any supporting documentation. Please note, any benefits letter will need to less than 30 days old.
  • Do married couples pay just one set of fees if they have the same debts

    No, they both have to pay the full amount which is currently £705 per person. The only exception to this is if the married couple were also business partners, in which case just one fee is paid.
  • Is bankruptcy always done at my local county court

    Yes it is, but in the case of large metropolitan areas like London, Manchester and Liverpool you need to double check which court is applicable as often certain postcodes are farmed out to smaller courts. The other thing to note is if you have recently moved to a new address (less than 3 months), you will need to attend the County Court which had jurisdiction over your previous address. This is often not a problem, but it can cause inconvenience if you had recently moved from Sunderland to, say, Liverpool.
  • What does ‘Centre of Main Interests’ mean

    Under EU regulation, all the member states (but not Denmark) allow you to enter into bankruptcy where you are normally domiciled and this is known as the 'Centre of Main Interests'. This is of particular interest when it comes to the UK's lenient insolvency laws, as people who might have been subject to harsher penalties in countries like Germany, find themselves emigrating to the UK to go bankrupt here. This has lead to a phenomenon known as 'Bankruptcy Tourism', something which the UK's Insolvency Service is acutely aware of. The UK now conducts stringent tests to establish exactly where the 'Centre of Main Interests' lies - is the person here to stay or are they just passing through? Among other things, they will see whether the person has a National Insurance Number, is registered for tax, has a local bank account, has enrolled their children in local schools, etc. Nowadays, when somebody with predominantly foreign debt petitions for bankruptcy, it is not granted on the day, but deferred for a week or two until the checks have been done.
  • Do Bankruptcy Restrictions apply if move abroad

    Yes they all apply, with one exception viz. you are allowed to be a Director of a foreign company provided it does no business with companies registered in England or Wales.
  • I have been made bankrupt over a £1500 credit card bill – now what

    This is most unusual as it would have cost the creditor almost as much again to take you through the process. However, if you have received the bankruptcy paperwork from the court and are in a position to settle, simply get in contact with the court and the bankruptcy will be annulled. There might be penalty fees involved, but it's worth paying them to get rid of this problem.
  • Is my partner’s income taken into account in bankruptcy

    Yes it is, but it's only what he/she contributes to the household and not the full amount as some people think. Therefore, it  might be that he/she earns £1200 per month but if that individual also has high personal expenses e.g. paying of loans, cars, credit cards etc, then it will only be the residual income which is declared e.g. £450 per month. It is very important that you get the income and expenditure right in bankruptcy or you could end up in a payment agreement you can ill afford. Sorting out income and expenditures is one of our specialities, so call us if you need help.
  • Will I be able to keep my Buy to Let properties in bankruptcy

    The short answer to this is 'Probably Not' as BTL properties do not get the same protection as the main residence or marital home in bankruptcy. This would especially be the case if there was equity in the property, as the Official Receiver / Trustee would use this to offset costs and distribute among your creditors. The main residence or marital home on the other hand does receive protection, especially if there is no or marginal equity. In these circumstances it is most unlikely that the property would be lost, provided mortgage payments were maintained.
  • Will bankruptcy stop a Liability Order

    Just to clarify, a Liability Order is the 7th and final step a Council takes to recover outstanding Council Tax and it is processed through the courts. What usually happens is High Court Bailiffs - the worst kind - do everything possible to recover the money and might have set up a repayment plan over several months. If this has already been done then we can't guarantee that bankruptcy will make the problem go away, unless the Official Receiver instructs otherwise. The reason for this is that non-payment of Council Tax is viewed as very serious. The best call here is to get in touch with a Council prior to the Liability Order stage and make some kind of arrangement.
  • Do Bailiffs get involved with bankruptcy

    No, there is no Bailiff activity whatsoever. In fact, at no point does anyone come to your house / flat to assess what you have in terms of assets. The most likely triggers for Bailiff activity are a) if you have had a CCJ made against you and you have ignored the terms (The Sheriffs are coming) and non-payment of Council Tax which has resulted in a Liability Order.
  • Could I be refused Bankruptcy

    Assuming your debts are above £15,000 and there are no issues concerning residency and you are not already in an alternate debt solution such as an IVA or Debt Relief Order, then no. Occasionally, a bankruptcy might be refused because a person is from a different part of the country and has only been living at their current address for a month or two - under these circumstances, a person would be required to attend the County Court where they were living previously. Another snag might be when a person only has foreign debt; the courts would have to investigate the person's UK status i.e. is their Centre of Main Interests (COMI) here or in another country? There is one last possible issue - more and more courts are now asking if a person has taken professional advice and might not allow the bankruptcy to proceed if the answer is no. But by and large, most bankruptcies are accepted - we have not had a single case rejected in nine years.
  • How does a DMP affect my credit rating

    The short answer to this is 'badly' as it invariably means a number of missed payments - recorded as the number 'one' on your credit file - and obtaining credit from high street lenders will be well nigh impossible. The word 'arrangement' might also appear on your credit file, indicating that you required help restructuring your debt. The only way to correct this malaise is to somehow pay the outstanding debt and get a letter (s) of satisfaction from the lender (s) and submit this to the credit reference agencies. If you were to do this, the magical word 'satisfied' would appear next to the creditors on your credit file and your rating would improve markedly.
  • Is a DMP better than Bankruptcy

    Although both Debt Management Plans and Bankruptcies both fall under the umbrella of 'debt solutions', they are essentially very different. For a start, DMPs are informal arrangements that you can leave at a moment's notice whereas bankruptcies are formally administered by the Insolvency Service. If your debt is fairly low e.g. around £8,000 then a DMP is probably the right way to go, but if it is over £15,000 then it is extremely unlikely that you will ever pay off the debt and remain in the arrangement for many years - we know of a lady who was no closer to paying off the debt 21 years after starting her DMP! Bankruptcy on the other hand solves the problem which is getting rid of the debt once and for all, a bit like surgically removing a cancerous growth. Something else that needs to be considered is your credit score which will be low for many years, as it will reflect defaults / arrangements. Therefore, if you entered into a DMP last month with a recent debt, it will reflect on your credit file as a default for six years. Even after this period i.e. when it drops off your credit file, you still owe the money. Bankruptcy might sound like castor oil, but we know of multiple cases where people have secured vehicles on finance two years after discharge and they have no debt whatsoever. You be the Judge, but if your debts exceed £15,000 it might be best to bite the bullet and solve the problem once and for all.
  • Is a Debt Relief Order better than Bankruptcy

    In terms of your credit rating, the answer is a definite No as both DROs and Bankruptcies are listed on the Insolvency Register and that means a zero credit rating for a minimum of 15 months. That point aside, the effect is very similar in that your debt is wiped out once and for all - it is not restructured or shuffled about as is the case with DMPs, it is gone forever. However, very few people actually qualify for DROs as the criteria are so strict. Not only do your debts need to total less than £15,000 but you need to be on very low income, have virtually no disposable income at all and have no assets worth mentioning. If you Google the exact criteria and feel you might qualify, it can be arranged through your local CAB.
  • If I’m married does my wife need to go bankrupt as well

    No she doesn't, but you need to take into account that if the debts were taken jointly, she will also be liable for the full amount outstanding and not half, as some people think. The reason for this is that loans are taken 'jointly and severally' and that means you both owe the full amount. If, on the other hand, this is not the case and she only owes a few thousand compared with your £15,000+ debts, she might well be advised to go a different route.
  • Can I leave a credit card out of my bankruptcy

    No you can't and woe betide anybody who tries this, as it means an automatic bankruptcy restriction i.e. you will be bankrupt for several years. When you go bankrupt the Official Receiver has sight of your bank records and credit file, so there is no place to hide. Even using a credit card just prior to bankruptcy will raise questions, so best play it straight.
  • Do I need a Solicitor to apply for bankruptcy

    No you don't and it will cost you an arm and a leg to get an Insolvency Practitioner involved. Most of the information required can be found online or by visiting the CAB, though it must be said that they tend to have a broad knowledge of many subjects and are not outright specialists in bankruptcy. We're loathe to admit it, but we at Bankruptcy UK are every bit as old and wise as the dears at the CAB, but we do specialise in bankruptcy and we will also do all the paperwork for you. Remember, possibly the most important aspect of any bankruptcy is the income and expenditure as, if you get it wrong, you will be stuck in a payment arrangement (IPA) for three years after the bankruptcy. Call us and we will make all these problems go away.
  • Can I keep my car on finance in bankruptcy

    The short answer to this is 'No' as the Official Receiver would view the monthly payment as a likely source of revenue for an Income Payments Agreement. Having said that, we have known exceptions. For example, if the loss of a vehicle on finance would directly result in a bankrupt losing his / her job e.g. an area representative, there is a chance it would be allowed. The reason for this is that the OR cannot impose any restriction / condition that directly affects an individual from making a living. However, it really is a roll of the dice and the percentage call is that the vehicle will be lost.
  • Can I put a secured loan into a bankruptcy

    Secured loans do not ordinarily form part of bankruptcy unless there is an impending shortfall on a property sale. In this case, once the property has sold, it transforms from a secured debt into unsecured and is included. Just to clarify, if you enter into bankruptcy and a property is yet to be sold / repossessed, you would not be liable for any shortfall regardless of the time it takes for the property to sell and the final figures to become known. If you were to find yourself in this position, avoid signing any acknowledgements of debt from the mortgage lender, as they may pursue you later.
  • Do secured loans go into bankruptcy

    Secured loans such as mortgages are listed on the bankruptcy paperwork, but do not form part of the bankruptcy as such, as these are assets owned by other parties (banks). The only exception to this is when a property is to be repossessed and sold - once sold, the asset becomes unsecured and any shortfall is written off in bankruptcy. As a matter of interest, you would not be liable for any shortfall regardless of the time it takes to sell the property, Therefore, you might be bankrupt in March but the property only sells in October, but you will still not be liable.
  • Will my creditors be in court when I go bankrupt

    No they won't, as your creditors will not be aware of the bankruptcy - unless you tell them. They will become aware of the bankruptcy in due course as the Official Receiver will write to them as part of the administrative process.
  • Will my name appear in the newspaper when I go bankrupt

    No, this is unlikely as the laws changed a few years ago. The only time names are published now is if, for example, a trader had many local creditors (suppliers, etc.) and the Official Receiver thought it might be in the best interests of the community to publish the information. But for everyday bankruptcies this will not happen.
  • What happens to my PPI claim if I go bankrupt

    PPI claims are classified as assets in bankruptcy and belong to the Official Receiver. The bank in question should direct any refund to the OR, but to the best of our knowledge Barclays is the only bank that actually does this. As a result, plenty of people successfully claim and keep the money; the only way the OR could possibly find out is if you told them and that is unlikely to happen. But you didn't hear that from us.
  • Somebody is threatening bankruptcy but I’ve received no Statutory Demand

    A statutory demand is the pre-cursor to bankruptcy so until that arrives in the post it is an empty threat. However, be cautious especially if you have a property (ies) with equity, or other significant assets. In this case, a Trustee will be appointed i.e. a private Insolvency Practitioner and that means very high fees. Best get it straightened out unless, of course, you have no assets in which case the creditor might be doing you a favour.
  • Will I ever recover my credit rating if I go bankrupt

    Yes, certainly. We have had reports of people buying furniture on HP just 18 months after discharge, while others have managed to get mortgages just three years after bankruptcy.  To aid recovery, it’s important to apply for one of the so-called ‘credit repair’ credit cards (Capital One, Vanquis, Aqua, etc.) as soon as you are discharged and make regular small purchases and payments in full. The reason for this is that successful payments record as a ‘O’ on your credit file i.e. a payment and a string of zeroes next to any financial transaction racks up the points on your credit score, especially if you settle in full every month (avoid minimum payments). Likewise, internet providers such as Virginmedia and BT also have contracts which record zeroes for successful payments. Follow these simple guidelines and you will be in good shape.
  • Why is it so hard to speak to somebody at my IVA company

    That's because once you have signed up and the dust has settled, they are interested in just one thing and that is your monthly payment. They know perfectly well that around 70% of their clients would have been better advised to enter into bankruptcy, but there's no money in that. When the phone rings they know it's trouble, so they ignore. IVAs are designed to protect expensive assets such as properties which might otherwise be lost in bankruptcy, but most of the people we speak to are in rented and holding down everyday jobs, and derive no benefit from being in an IVA. Even worse, people on benefits are also roped into IVAs when there is zero possibility of a monthly payment in bankruptcy. The message is simple - if you are an everyday person like the rest of us, bankruptcy is the answer. If your name is Hugh Grant, an IVA might be the way forward.