Bankruptcy

If your debts are serious enough that you are considering the prospect of going bankrupt, you need to be aware that there are charges for declaring yourself bankrupt. These being a £150 court fee and a £450 to help meet the costs of the Official Receiver. This could mean total costs of £600 which you are legally bound to meet yourself.

If you are on means-tested benefits, then you will be exempt only from the court costs of £150. This is another reason why it's so important that you get debt help and consider all other possible debt solutions such as an IVA (Individual Voluntary Arrangement) first.

Note: These fees are correct at time of publishing.

• Your IVA payment is relatively easy to calculate. All you need to do is take your living costs from your income.
• You will be discharged after 12 months (sometimes less) with your debts written off.
• If you have been bankrupt before you may incur a bankruptcy restriction which would see the bankruptcy extended up to a maximum of 15 years.
• You will lose control of your assets.
• You cannot obtain credit of more than £250 without informing the lender that you are bankrupt.
• The Official Receiver must investigate your affairs to confirm information that you have submitted is accurate.
• You cannot act as company director.
• You cannot be involved in the management of a Limited Company.
• You must only trade under your own name for the period of the bankruptcy.
• You cannot continue to practice as a Chartered Accountant / Lawyer / Solicitor.
• You cannot become a Member of Parliament or Local Authority.
• All household goods (furniture, television, appliances) and your vehicle (within reason) are exempt from bankruptcy.
• Your name will be published in the local newspaper.

• Student Loans
• Secured Debts (Mortgage / Hire Purchase)
• Court Fines i.e. Child Support Agency payment, Maintenance orders and other fines made through the family courts.
• Any debts that are connected with fraud.
• Any debts connected with (or arising from) personal injury claims.
• State benefit overpayments

An individual can be made bankrupt either in one of three way:

• Voluntarily - You can make yourself Bankrupt
• Involuntarily - You can be made Bankrupt from a creditor you owe money to (£750 Minimum).
• The supervisor or anyone bound by an IVA can be made bankrupt if the terms are not followed.

A bankruptcy order can still be made even if you refuse to acknowledge the proceedings or refuse to agree to them. You should therefore co-operate fully once the bankruptcy proceedings have begun. If you dispute the creditor's claim, you should try and reach a settlement before the bankruptcy petition is due to be heard. Trying to do so after the bankruptcy order is made is both difficult and expensive.

With Bankruptcy comes some serious implications. Some of these are detailed below.

• It is advertised in the local press
• If you are a renter, your landlord will find out
• In some occupations your employment may be at risk. i.e. You cannot be a company director, you may not practise as an Accountant/Lawyer/Justice of the Peace/Member of Parliament, you cannot take part in the promotion, formation or management of a limited company (LTD) without permission from the court.
• You cannot trade in any business under any other name unless you inform all persons concerned of the bankruptcy.
• You lose control of your assets.
• You cannot obtain credit for over £250 without the permission from the lender.
• Your credit is affected for many years after the annulment.
• You may be publicly examined in court.

• For the person involved, bankruptcy provides relative peacve of mind.
• You could be discharged after one year (or less in some cases).
• For the creditors, bankruptcy allows a full investigation of the debtor's affairs to be carried out.

People think Bankruptcy is the only choice when it comes to dealing with their debts, but there are many other solutions in todays current market.

• You could negotiate payments with your creditors and arrange an informal agreement or use a Debt Management Company where you pay back your debts at an affordable monthly repayment.
• Depending on your circumstances, you could qualify for an IVA; a legally binding agreement between you and your creditors, which enables you to pay back a portion of the debt you owe and have the rest written off.

Bankruptcy has changed a lot over the years. Currently, the time for being discharged from your Bankruptcy is after a maximum period of 12 months. After this time, you will no longer be bankrupt. The length of time of a Bankruptcy can be altered in some circumstances.

When you have finished your Bankruptcy, it is important to remember that the effects of Bankruptcy extend far further than just one year. i.e. your credit rating will be affected for many years.

People may find out. Bankruptcy Orders are advertised in the London Gazette and also in your local newspaper. Your details will be placed on a Bankruptcy Register which is maintained by the Department of Trade & Industry and The Insolvency Service. The Register is a public document and can be viewed by the public on the internet.