Bankruptcy is something you may want to consider if you have overwhelming debts you cannot pay.
If you have unsecured debts of just £750 or more you can declare yourself bankrupt through your own application. Bankruptcy fees are currently £680 and the application is made online to the ‘Adjudicator’
There are also some situations where a creditor can petition for a debtor to be declared bankrupt, if the debtor owes them at least £5,000 in unsecured debts
Typically, you will be discharged from bankruptcy after one year
There are some debts that cannot be discharged in bankruptcy, these are:
Clearly bankruptcy should not be taken lightly and before you take any action you should seek expert advice.
An individual wishing to be made bankrupt will need to complete a bankruptcy application containing prescribed information, authenticate the application, and submit it electronically to the adjudicator. The date of the application is the date on which it is submitted.
Upon receiving a bankruptcy application, the adjudicator must acknowledge receipt and it is at that moment that the application is ‘made’.
In order to determine the bankruptcy application, the adjudicator can request further information from the debtor, and can also undertake verification checks, i.e. a search of the electoral roll to confirm the debtor’s residence.
The adjudicator must determine the bankruptcy application within 28 days from the date on which the application was made, although there is scope in certain circumstances for that period to be extended by 14 days where the adjudicator requests further information from the debtor
An Official Receiver will take control of your bankruptcy. They will talk to you about your finances and your assets and look at how you can make some contributions towards your debts. You must co-operate with the official receiver and give them any information they require.
The Official Receiver will also look into your financial affairs and the circumstances leading to your bankruptcy. They will retain control over almost all of your realisable assets which includes but is not limited to your house, your car and money. You will keep your pension as long as it is an Inland Revenue approved scheme and the benefits have not crystallised.
You will not necessarily lose your home or other possessions – but it is very important to seek expert advice to ensure you make the right decisions to protect your property.
It is also possible that you may be required to enter into an Income Payment Agreement (IPA). This is a regular payment of all of your disposable income over £20 per month as a contribution to your overall debts dealt with in Bankruptcy.
If an agreement cannot be reached with the Official Receiver under an Income Payment Arrangement, you may be required to go back to court under an Income Payment Order (IPO) request. In any event, either an IPA or an IPO will last for a period of 3 years.
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