It is important that before you start the bankruptcy process, you consider all your options and get advice. It is likely that another debt solution may be suitable for you, and could save you a lot of the difficulties that come with bankruptcy, such as the sale of your assets. We offer expert advice on a variety of debt situations and are happy to lend you an ear and a helping hand.
Once you have decided that bankruptcy is your best option, it is a good idea to withdraw some money to live on as once your bankruptcy is approved, your bank accounts will be frozen. It is not a good idea, however, to withdraw a suspiciously large amount as this may be construed as an attempt to hide money from your Official Receiver, which can result in punitive measures. Be honest with your Official Receiver about why you withdrew the money, and make sure you can justify the amount.
How do I apply for bankruptcy?
You can apply online for bankruptcy, or you can ask someone else to do it on your behalf, although it is important that you read through and understand what they are submitting. The information that the application will ask you includes:
- Personal information
- Information about any businesses you run
- Declarations about your eligibility for bankruptcy
- Details of any previous bankruptcies
- Details of any other insolvency procedures you’ve been through
You must then pay £680 if you are based in England or Wales, or £669 if you are based in Northern Ireland. You could pay this fee in instalments online, or as one cash lump sum at a named bank.
What happens during bankruptcy?
If the application is accepted, your bank and building society accounts are frozen and your case is passed to an Official Receiver. It is their job to try to find as much money to give to your creditors as possible while allowing you to enough for you and your family to get by. Legally, they now own your property and have control of your finances, so they have the power to:
- Sell your property to pay your creditors
- Decide whether you are able to make monthly payments to your creditors for up to three years
Details of your bankruptcy are recorded in the public Insolvency Register.
The Official Receiver may require you to:
- Fill out and return a questionnaire within a specific time period
- Provide your financial records, including records of your property
- Attend a phone interview within ten working days of the beginning of your bankruptcy. This could last up to three hours, depending on the complexities of your case, so make sure you are free and prepared.
- Appear at a public examination if at least half your creditors ask for it
- Appear at a meeting of your creditors
- Tell your Official Receiver of any changes in circumstance as soon as possible
You must cooperate with the Official Receiver, even if you did not voluntarily agree to the bankruptcy, as you could have your bankruptcy discharge suspended so your bankruptcy lasts longer. You could also become subject to a bankruptcy restrictions order which can last up to 15 years and means you have restrictions placed on your financial life, such as limitations on taking out credit, work in certain fields. You can also be arrested, prosecuted, and sent to prison for up to 7 years.
When will I be discharged from bankruptcy?
If you fully cooperate and there are no problems with your bankruptcy, you should be discharged after 12 months. You may still have up to two years left of repayment, but generally your debts are written off. It is a good idea to request a letter of discharge so that you have written proof that you have been discharged.
Your bankruptcy remains on your credit file for a further five years, which can affect your ability to take out credit. But, other than this, you are able to begin to rebuild your credit score.
Conclusion
Applying for bankruptcy is not a decision that should be made lightly. Always ensure you’ve done your research and considered alternative options before agreeing to enter such a serious debt solution.
The process of applying for bankruptcy is fairly straightforward and can be done using an online form. Before you start your application, gather all relevant financial documents you think you’ll need as this can speed up the process.
There are certain restrictions you must stick to in bankruptcy. It’s crucial that you abide by these rules to be able to be discharged after 12 months as expected.
