The bankruptcy process
An individual can be made bankrupt in one of two ways. Either a creditor (who you owe £750 or more) can petition for your bankruptcy, or you can petition yourself.
Bankruptcy is usually the last resort if you have no way of repaying the amounts you have borrowed and no other option is viable as a solution.
Bankruptcy petitions are made either in the High Court in London, or at your local County Court.
The courts will either hear your petition once they receive it, or they will arrange a date at a later date. The court will consider the petition so that they are happy that a Bankruptcy order is the right solution. If they believe there is a more suitable option, they may appoint an Insolvency Practitioner if they feel an IVA would be more appropriate.
If the court approves the Bankruptcy order, they will appoint an Official Receiver to look into your financial affairs. The Official Receiver is responsible for looking into what finances and assets you may have that can be offered as part payment to your creditors. In effect, the Official Receiver becomes Trustee of your estate.
Bank statements, insurance policies and details of assets and liabilities you have must also be handed over to the Official Receiver.
If you have any goods that the Official Receiver believes has any value, the OR will take possession of those goods to sell at auction. The money from any goods sold, will be added to your estate for distribution to your creditors and payment of costs.
The Official Receiver will only take goods if they believe they are of a certain value or items that are needed for work, they will not be interested in taking everyday household items or children’s toys or tools of your trade.
It is also unlikely that the Official Receiver will be interested in taking a vehicle if it is considered low value (usually less than £2,000).
A bankruptcy will usually last for 12 months, if there are no discrepancies and you have not been made bankrupt previously. During this time, you will not be able to take out further credit over £500.
It is important that you comply with the Official Receiver’s request when they ask for details regarding your finances, or request that you provide information. If you do not comply, you could risk extending the term of your bankruptcy.
Never be concerned about asking any questions you are unsure of regarding bankruptcy. If you are making your own petition, and you are unsure of how to fill out your form or if the form you filled out is correct, as the Clerk at the court to help you before making your petition. Alternatively contact an Insolvency Practitioner for Advice. In addition to being able to assist you with the bankruptcy process, they may be able to offer you other alternatives that may allow you to avoid bankruptcy.
Call our specialist debt team on 08000 915 004 to find out how we could help you.