A look at the steps that need to be taken should you decide to declare bankruptcy.
Form-filling, meetings and court submissions. Whilst filing for bankruptcy is naturally a serious step to take, it does not have to be stressful or intimidating. The following steps however should hopefully give you an idea of what you can expect.
Meet with a debt advisor
As dealing with large debts is such a big step to take, it is sensible to seek advice as your first port of call. Bankruptcy will mean the sale of many of your assets, and you need to talk through the implications with an expert. Seeking advice will also mean you are made aware of other viable alternatives, should they exist, so that you have all the information to hand in order to make an informed decision. If you agree that bankruptcy is the best option, then the next step is filing for bankruptcy.
Two forms need to be filled in, and bankruptcy fees paid. The first form is the Debtor’s Bankruptcy Petition, Form 6.27, on which goes your personal information.
The second form is the Statement of Affairs Form 6.28, a longer form that requires background information, employment details and creditor information.
As for fees, you need to pay £525 for the official receiver and £180 as a charge for court costs. The court fees can be waived in certain circumstances, so always look into whether you are applicable for such a waiver.
Once completed, the forms can be submitted to the relevant court. This tends to be the county court, but will be dependent on location. Forms are submitted in triplicate and the fees paid, and then the information submitted will be reviewed. If everything is in order, you will then meet up with the appointed official receiver.
Click here to find your nearest court.
Liaise With The Official Receiver
The official receiver becomes the manager of your affairs, and will assess your entire financial situation and your listed assets. They will act as an intermediary with your creditors, removing that responsibility from you, and value your assets and decide what can be sold to help pay off your debts. He will also discuss with you your financial capability to make regular payments. It is important to note during this period that your financial restrictions begin, so for the year until you are discharged (from the point of officially becoming bankrupt), you won’t have free use of your bank account or any credit cards. Additionally, you will have to inform the receiver of any change of circumstances, any improvement in your financial circumstances or any additional assets gained during this period.
The End Of the Bankruptcy Period
Your bankruptcy should end a year after it began. This is known as being discharged. You will still feel the effects of the bankruptcy for five years thereafter, but it is still an important milestone to reach, and you will be removed off the bankruptcy register three months after the date of discharge.
The Bankruptcy Process Differs From Area To Area
Or country to country, to be more precise. The process is the same in England and Wales, but differs in some aspects from the process in Scotland and Northern Ireland.
Bankruptcy in England and Wales
A bankruptcy in either of these two countries requires a court order, usually through a county court, in an area in which the individual has resided for at least six months. An individual can apply for bankruptcy or a creditor can apply to make someone bankrupt against their will, if owed at least £750. The official receiver will oversee the case, and the process currently costs around £700 in fees. The individual will be required to make monthly repayments to help pay off some debts and all being well should be discharged after 12 months.
Bankruptcy in Scotland
A different body oversees things in Scotland, and this is the Accountant in Bankruptcy, a government body, and the process is referred to as sequestration.
To qualify, you must owe at least £1500 and must reside in Scotland or have resided there at some point in the previous year. You cannot have gone through the bankruptcy process in the previous five years and must be capable of paying a £200 fee.
In addition to the information above, there is an alternative route for those on low incomes who have little in the way of assets in the form of LILA – Low Income Low Assets. Low income means gross weekly income of no more than the standard national minimum wage for a forty hour working week. Low assets means that you have no single asset worth more than £1,000 and also that your total assets do not total more than £10,000. You must not own or jointly own a house or any other property or land.
The appointed administrator in Scotland is called the trustee and he or she will be either a licensed insolvency practitioner or the Accountant in Bankruptcy.
Bankruptcy in Northern Ireland
Going bankrupt in Northern Ireland is not the same process as going bankrupt elsewhere in the UK. Unlike England for example, the process is not conducted through local courts and instead are made through the Royal Courts of Justice in Belfast.
The process is still similar however to other parts of the UK, and is split into two stages. Firstly an application will be submitted and presented, and then there will be a court hearing where your application will be heard. The two stages are normally done on two separate days.
Should a submission be accepted, then the individual will be interviewed by the official receiver to go through all the relevant details and work out the logistics of the order. As per any bankruptcy order, he or she will decide the length of the order (12 months usually), repayment schedules and what assets can be sold.
Costs usually amount to around £640 in total - £525 for a deposit for administration, court fees of £115 and a small fee of £5 or £10 for a solicitor to swear the details of your statement of affairs.