BANKRUPTCY FAQ's
What is Bankruptcy?
How does the Bankruptcy process work?
What will happen if I am made bankrupt?
Will I lose my home?
What are the effects of bankruptcy?
How long will bankruptcy remain on my credit file?
Will others know that I am bankrupt?
What is the cost of becoming bankrupt?
What is Bankruptcy?
Bankruptcy is only for those people who have serious debt problems. It is a legal action whereby a person who is unable to repay their debts are declared bankrupt by a decree of the court.
How does the Bankruptcy process work?
To declare yourself bankrupt a bankruptcy petition must be filed by the debtor (debtor petition) or by the creditors if they are owed more than £750 (creditors petition). Once the petition has been filed a court date will then be set. The first hearing is held to see whether or not the order should be made. Once the bankruptcy order has been made the debtor will then be declared bankrupt.
What will happen if I am made bankrupt?
In this case you will have to give the official receiver (person who is responsible for the administration of bankruptcies) information about your financial affairs. If you are made bankrupt you are no longer allowed to keep using bank or building society accounts, you may have to attend court to explain the reasons for your debt and you must not make direct payments to any creditors.
Will I lose my home?
Your home may have to be sold to pay towards your bankruptcy debts. This will apply whether your home is solely or jointly owned. If your home is mortgaged and if you have kept up your mortgage payments or not, your lender should be notified of your situation and impending bankruptcy.
What are the effects of bankruptcy?
Once you become bankrupt all of your assets including your home will come under the control of the trustees and certain restrictions will be put on you in the future. All assets (unless they are required for a basic standard of living) will be sold in order to meet your unsecured debts. All spare income will be paid to creditors. Bankruptcy can affect future job prospects and your credit rating will take years to rebuild.
How long will bankruptcy remain on my credit file?
6 years. After this time you may still have to declare that you were bankrupt in certain circumstances.
Will others know that I am bankrupt?
The people whom you have had any financial relationship with will be informed of your bankruptcy including landlords. banks and building societies, people you owe money to, mortgage and loan companies etc. Bankruptcy orders are advertised in your local newspaper and the London gazette.
What is the cost of becoming bankrupt?
There are usually 3 fees to pay to go bankrupt:
* £150 court fee. In some cases this may be waived for example if you are on income support.
* £345 deposit must be paid in all cases towards the cost of administrating the bankruptcy.
* £7-10 fee to swear the statement of affairs (except if the bankruptcy hearing is taking place in a county court).
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