Summary
Bankruptcy isn’t nice but if you are facing it, it is better to know the system. This article gives an insight into the procedure
If you have serious debt problems you could be considering bankruptcy. It’s crucial to comprehend what bankruptcy entails and whether it’s the right wayfor you.
What does bankruptcy mean? Bankruptcy is a transient legal status. When bankrupt, your non-essential assets like property and possessions including excess income are used to pay the debts you owe. After the bankruptcy period has ended, most debts are discharged. This may be an effective means of removing debts destroyer you can’t pay.
How long will you be bankrupt for?. Bankruptcy ordinarily lasts for one year. After this period, you’ll be ‘discharged’ from your bankruptcy in spite of how much you still owe. Your discharge could happen earlier if you co-operate fully with the Official Receiver. Nevertheless, in a small number of cases and if you have conducted yourself negligently, bankruptcy can remain for much more than a year.
How do you become bankrupt? A court pronounces you bankrupt by issuing a ‘bankruptcy order’ after it’s been supplied with a ‘bankruptcy petition’. As a general rule this occurs in 1 of 2 ways.
Firstly by filing your own bankruptcy petition. A debtor’s petition form can be can be downloaded off the computer from the Insolvency Service website or aquired from county courts with bankruptcy jurisdiction. The form should be filled in and then taken to the county court nearest to you, that has bankruptcy jurisdiction. A fee of 150 pounds and deposit of three hundred and sixty pounds is required at this time. This cost cannot be ignored.
What does a creditor have to do to make you bankrupt?. Your creditors can serve a creditor’s petition if your unsecured debt is more than 800 pounds. Once bankruptcy proceedings have started, you are obliged to co-operate totally even though it is a creditor’s petition and you contest their claim.
From where do bankruptcy orders come from? Bankruptcy petitions are usually put forward in a county relevant court near where you live or trade.
Who would sort out your bankruptcy? After a bankruptcy order has been filed against you, your creditors will not be able to pursue you for payment. Payment of the money owed becomes the responsibility of the trustee. An Official Receiver is appointed if you have no assets. If you are in possession of assets, an Insolvency Practitioner will be assigned to function as trustee and sell your assets to pay the money owed to your creditors.
How will bankruptcy affect you?. As soon as you are bankrupt, the Official Receiver, or selected trustee, can sell your assets on your behalf to pay your creditors. Though, particular goods aren’t treated as assets for this purpose, for example: required household goods such as furniture, bedding, clothing and tools and equipment needed for work.
The Official Receiver make an assessment of your income taking into account expenses and determine if payments should be made to your creditors. You may be asked to sign an ‘income payments agreement’ to pay fixed monthly instalments from your income for three years.
What are your obligations?. You have a duty to: Give the Official Receiver information about your finances, assets and creditors, and take them to the Receiver with the relatable paperwork, like bank statements and insurance policies tell your trustee about any income or assets, for the period of your bankruptcy stop using bank or building society accounts and credit cards, don’t apply for credit over three hundred pounds without informing the creditor that you’re bankrupt, do not make payments straight to your creditors. It is likely that you willYou might also have to go to court and give details as to why you’re in debt.
If you’re thinking about declaring yourself online debt advice or you’re being threatened with bankruptcy, it is extremely important to obtain professional financial advice.