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Bankruptcy FAQs

What is Bankruptcy?
Bankruptcy Pros and Cons
Bankruptcy FAQs

Bankruptcy FAQ’s

What is Bankruptcy?
What is the Bankruptcy process?
Where is the bankruptcy order made?
How long does Bankruptcy last?
How much will it cost to make myself bankrupt?
How does bankruptcy affect your credit rating?
What alternative solutions are there to bankruptcy?
What will happen to my bank account?
What will happen to my savings?
Will my bankruptcy been publicised?
What debts are not included in my Bankruptcy?
What does 'Discharge from Bankruptcy' mean?
Will I be forced to sell my home?
What about any equity in my property?
Is it possible to annul a Bankruptcy?
How do I apply for Bankruptcy?

What is Bankruptcy?
Bankruptcy is a legal term used for an individual or business who cannot afford to pay there debts back to their creditors. Creditors may file a bankruptcy petition against a debtor in an attempt to regain all or part of what they are owed.

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What is the Bankruptcy process?
A Bankruptcy Petition is presented from either yourself, your Trustee or your creditors to the courts. The courts then make a decision on whether you can go bankrupt.

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Where is the bankruptcy order made?
A Bankruptcy Petition can be presented at either at the High Court in London or a County Court near to where you live. To search for your nearest County Court visit the Court Service website at: www.courtservice.gov.uk. This has a list of all the Civil Courts and County Courts in the country.

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How long does Bankruptcy last?
Bankruptcy can be discharged after one year, which basically means you are free from some or all obligations imposed under the order. This is not necessarily automatic and can be postponed by the court if the court feels necessary.

Exceptions may include debts arising from fraudulent activity, certain crimes and fines. If you have been declared bankrupt before within the last 15 years and this is your second time, you will not be automatically discharged. You will only be able to apply for a discharge 5 years after you petition date. Even then it may be rejected.

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How much will it cost to make myself bankrupt?
When going bankrupt there are three fees you may have to pay:

  1. The Court fee of £120
  2. The deposit of £250 towards the costs of administering your bankruptcy
  3. The fee to swear the statement of affairs (Usually £7)

These fees may increase depending on your circumstances. If you are a married couple and you are both applying for bankruptcy, you will each have to pay separate fees.

This is the same if you are a business partnership. Each partner would have to pay separate fees unless all the parties apply for a Joint Bankruptcy Petition under the Insolvent Partnerships Order 1994.

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How does bankruptcy affect your credit rating?
Bankruptcy is registered with credit reference agencies for a minimum of six years. Although it is possible you will receive a ‘discharge from Bankruptcy’ order which will mean you are now free from the restrictions of Bankruptcy.

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What alternative solutions are there to bankruptcy?
Bankruptcy should always be considered as a last resort as there are alternative solutions available which may be more suitable to your circumstances. An IVA is a popular alternative if you owe over £15,000 or a Debt Management Plan maybe more suitable if you would prefer to look for a less formal arrangement. Always consult a professional Debt Advisor before considering Bankruptcy.

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What will happen to my bank account?
When you go bankrupt your account may be frozen or even closed depending on the circumstances. Some lenders will allow a debtor to have a bank account however, the debtor must inform the bank that they have been made bankrupt.

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What will happen to my savings?
Any savings the debtor has accrued will be transferred to the Trustee once the petition has been passed.

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Will my bankruptcy been publicised?
Yes, your Bankruptcy is recorded on a public register called the ‘Register of Insolvencies’ or (ROI). Anyone can search the ROI but there is usually a charge to do this. You will remain on the register until one year after the Trustee has finished their duties.

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What debts are not included in my Bankruptcy?
Not all debts can be included in your Bankruptcy. Examples of these are;

  1. Student Loans
  2. Any debts which have been incurred due to fraudulent activity
  3. Court Fines, i.e. Maintenance Orders and Child Support Agency payments

These debts can still be pursued by creditors after the bankruptcy order against you has been put in place.

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What does 'Discharge from Bankruptcy' mean?
When a person receives a 'Discharge from Bankruptcy', they are released from the restrictions imposed on them by the Bankruptcy Order.

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Will I be forced to sell my home?
All your assets belonging to you, including your home will be transferred into the ownership of the Trustee, This doesn’t mean you would lose your home straight away. If the property is co-owned, or still occupied by a family member or dependants, then a ‘right of occupation’ period can be enforced to allow tenants to move out. The property will then be put up for auction.

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What about any equity in my property?
Any equity in your property will be included in the Bankruptcy order and will be used to pay off your creditors.

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Is it possible to annul a Bankruptcy?
Annulment of a Bankruptcy order can only be done through a Court. This removes any record from the register.

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How do I apply for Bankruptcy?
The UK Debt Advisor can you apply for Bankruptcy. Call us free on 0800 043 2027 or use our free call back service.

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