subject: Bankruptcy - One option for dealing with debts [print this page] Bankruptcy - One option for dealing with debts
Bankruptcy Order
At the hearing the court can decide one of four things:
Dismiss the bankruptcy petition;
Order a stay' in proceedings, i.e. suspend the proceedings if it feels it requires further information to make a decision;
Consider referring the application to an Insolvency Practitioner in respect of setting up an IVA if:
the unsecured debts total 20,000 or less
assets listed in the Statement of Affairs total 2,000 or more
the individual petitioner has not been declared bankrupt within the last 5 years
if the court feels that, given the circumstances, it is appropriate to do so.
If none of the above apply, the Bankruptcy Order will be made.
If appropriate the court will also issue a Certificate of Summary Administration. One will be issued if:
the bankrupt has unsecured debts of less than 20,000
has neither been bankrupted or subject to a IVA in the previous 5 years
and that the bankruptcy order is a result of a debtor's petition only.
NOTE: If the court makes no mention at the hearing of issuing a Certificate of Summary Administration, the debtor should ask the court to consider issuing one. This is because it is not possible to raise the matter at a later date.
After the Bankruptcy Order is made
Once the order is made, the debtor officially becomes bankrupt and effectively loses ownership of all property/assets, except for those items excluded.
On the day of the bankruptcy order, or as soon after as possible, the debtor will be summoned to the local Official Receiver's office. It is likely the debtor will be sent form B40.01, Short Bankruptcy Preliminary Questionnaire, to complete and take to the meeting. The debtor must also make a full statement to the Official Receiver at the meeting.
The Official Receiver uses the meeting to check that there has been full disclosure of all assets and debts. Most of this information will be contained in the questionnaire. He will also investigate the conduct and affairs of the bankrupt.
An examiner from the Official Receiver's office may visit the debtor's home to complete an inspection report and remove any valuables which can be sold. Such visits are usually made to business premises, but very rarely to a debtor's home.
BE WARNED. The Official Receiver does have the power to force entry to the bankrupt's premises and have the bankrupt's mail redirected.
The Official Receiver will also look to see if the bankrupt can make any payment towards the creditors out of income, either voluntarily or as a result of an income payment order'. Such payments are extremely rare and are only considered if there is sufficient funds remaining after the bankrupt's domestic needs are catered for. Usually this means there has to be well in excess of 100 a month left over to make it worthwhile.
Discharge
If you were made bankrupt on or after 1 April 2004:
Then you will be automatically discharged from your bankruptcy after a maximum of 12 months.
If you were made bankrupt before 1 April 2004:
In the case of it being your first bankruptcy, you'll be discharged automatically on 1 April 2005 or if you expect you discharge date to be before 1 April 2005, you will be discharged on that earlier date.
Where someone has been a undischarged bankrupt at any time in the 15 years before the current bankruptcy, unless teh previous bankruptcy was annulled, then discharge will automatically take place on 1 April 2009. You can ask the court for a discharge of 5 years after the date of the bankruptcy order, but the court can refuse or delay your discharge. Alternatively, they may grant it conditionally under certain terms, e.g. requiring that you make soem payments out of income.
However, where the undischarged bankrupt has not carried out his/her duties under the bankruptcy proceedings, the Official Receiver can apply to the court to have the discharge postponed. Should the court agree, the bankruptcy will only end once the suspension has bene lifted and the time remaining on the bankruptcy period has run.
After discharge the debtor will be issued with a certificate by the court. The debtor will be released from most of the debts that were owed at the date of the bankruptcy order, with soem exceptions:
Secured creditors
Fines
Maintenance orders and other family court orders
Debts from personal injury claims, unless the court thinks it fit to release you from them.
Debts incurred through fraud
Debt arising from certain other orders of the criminal court
