Summary
Bankruptcy is extremely distasteful but if you are facing it, it is worth knowing  what will happen. This article explains

If you have serious debt solutions you may be contemplating bankruptcy. It is imperative to know what bankruptcy necessitates and whether it is the right wayfor you.

What is bankruptcy? Bankruptcy is a provisional legal condition. When bankrupt, your non-essential assets for instance property, excess income and possessions are used to pay the money owed to your creditors. At the end of the bankruptcy period, most debts are discharged. This may be an effectual method of discharging  debt you can’t pay.

How long will bankruptcy last?. Bankruptcy usually lasts for 1 year. After this period, you’ll be ‘discharged’ from your bankruptcy regardless of the money you still owe. Discharge can occur earlier if you co-operate fully with the Official Receiver. But, in a minority of cases and if you’ve behaved irresponsibly, bankruptcy can remain for much longer than one year.

How do you become bankrupt? A court pronounces you bankrupt by issuing a ‘bankruptcy order’ after it has been supplied with a ‘bankruptcy petition’. Commonly this occurs in one of two ways.

Firstly, you are able to apply for bankruptcy. A debtor’s petition form can be can be off the internet from the Insolvency Service website or aquired from county courts with bankruptcy jurisdiction. The completed form should be, then taken to the county court nearest to you, that has bankruptcy jurisdiction. A fee of £150 and deposit of three hundred and sixty pounds is payable at this time. This amount cannot be waived.

A creditor making you bankrupt. Your creditors can present a creditor’s petition if your unsecured debt is over eight hundred pounds. When the bankruptcy proceedings are underway, you are required to co-operate totally even though it’s a creditor’s petition and you disagree with their claim.

Where can they issue a bankruptcy order? Bankruptcy petitions are normally presented in a county relevant court near where you reside or conduct business.

Who deals with your bankruptcy? After a bankruptcy order has been issued against you, your creditors can no longer chase you for repayment. Payment of these bills becomes the duty of the trustee. An Official Receiver is agreed if you have no assets. If you are in possession of assets, an Insolvency Practitioner will be appointed to function as trustee and sell your assets to pay the money owed to your creditors.

How bankruptcy affects you. As soon as you are bankrupt, the Official Receiver, or assigned  trustee, can sell your assets to pay your creditors. Though, a number of goods are not classed 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 work out if payments should be made to your creditors. You will probably be asked to sign an ‘income payments agreement’ to pay fixed monthly instalments from your income for 3 years.

Your obligations when you’re bankrupt. You have to: Give the Official Receiver details of your finances, assets and creditors, and take them to the Official Receiver with the appropriate paperwork, like bank statements and insurance policies notify your trustee of any income or assets, for the duration of your bankruptcy cease using credit cards and bank or building society accounts, don’t apply for credit over 500 pounds without revealing to the creditor that you are bankrupt, do not make payments direct to your creditors. You may also have to go to court and give reasons for being in debt.

If you are considering declaring yourself debt free or you’re being threatened with bankruptcy, it is essential to take independent financial advice.

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