Bankruptcy as a debt solution will provide you with the opportunity to make a fresh start but it does have serious legal, financial and professional implications that you need to be aware of before entering into it.
The single biggest benefit of Bankruptcy is that you'll typically be discharged from your liabilities after only twelve months. The Trustee in Bankruptcy (the person that is appointed to manage your assets) can extend the imposition of Bankruptcy through an Income Payments Order for up to 3 years if they believe you have sufficient funds available and it is in your creditor's interests.
It is the job of the Official Receiver (OR) or Trustee in Bankruptcy to maximise the amount that your creditors will get from your Bankruptcy. Not only will they will look at releasing any beneficial interest (equity) you have in your home (which can include a forced sale) but they can also sell any bonds and investments you have and even force you to trade down' your car if they consider its value to be excessive.
You can either petition for your own bankruptcy (which will cost between 450 and 612 the cost depends whether you're in receipt of Income Support and on which court you're petitioning) or one of your creditors can petition if you owe at least 750. These petitions will be presented at your local county court. When a bankruptcy order has been put in place, a notice of the order is published in the London Gazette', although this notice may be advertised elsewhere at the discretion of the official receiver.
After this bankruptcy order has been made the debtor has the following obligations:
Provide information on all financial affairs through a questionnaire (this may involve an interview to review the questionnaire)
Provide a full list of assets
Provide a full list of creditors and how much is owed to each
Transfer your assets over to your official receiver with all relevant paperwork complete
Inform you insolvency Practitioner of any assets that may become yours during bankruptcy (including cash windfalls)
Cease transactions with your bank
Not apply for credit in excess of 500 without declaring to the lender that you are currently bankrupt
Explain why you are in debt with valid reasons in a court of law
Not pay your creditors directly
If you're worried about debt and are thinking about declaring yourself Bankrupt, you may be surprised to learn that there are a number of alterative solutions available that may be more appropriate for your situation.
To ensure you are in receipt of up-to-date bankruptcy information and that you fully understand what your options are, please seek advice from one of the following charities: