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Debt Management & Debt Advice Freephone 0800 634 5521
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You will need to contact your local court, to file a Bankruptcy petition.
© Debt Emergency
Debt Management & Debt Advice
Debt Management & Debt Advice
Q.
"What is the Bankruptcy Process"
A.
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Freephone:
0800 634 5521
0800 634 5521
Bankruptcy Petition
The first step you need to take If you decide to declare yourself as bankrupt is to file a Bankruptcy Petition. If the bankruptcy is filed by yourself, the bankruptcy petition is called the Debtor's Petition.
In order to file for bankruptcy you will need to contact your local court. They will give you the details of your nearest county court that deals with bankruptcy hearings. You can also find the contact details for your local court by visiting courtservice.gov.uk
.
It may be that you find yourself being forced to go bankrupt by your creditors, in this case your creditors will file the Bankruptcy Petition. This is called a Creditor's Petition, this petition can only be filed by people to whom you owe more than £750.
You will also have to pay £370 into court when you file for the petition. This amount covers the Court Fee and the Official Receiver's deposit. If a Bankruptcy Order is not made by your local court then the deposit will be refundable, but the Court Issue Fee is not.
By filing a bankruptcy petition, you will not be prevented from your creditors, as they can still contact you or try to sue you. An individual must file for bankruptcy at their local county court, after which an Insolvency Practitioner is appointed as Official Receiver. Mostly this Insolvency Practitioner is put forward by the creditors, this is usually the case if the majority of the debts are consumer credit debts such as credit cards and loans. There are other occasions when the Official Receiver is appointed from a list of local Insolvency Practitioners.
As same as an IVA, the Insolvency Practitioner needs to go through a fact finding and collecting all the relavant information. After which information and evidence is collected that gives an accurate representation of the debtor's financial position. This process is rigourous, it requires the debtor to attend meetings with the Insolvency Practitioner and to provide information and evidence about the following:
The first step you need to take If you decide to declare yourself as bankrupt is to file a Bankruptcy Petition. If the bankruptcy is filed by yourself, the bankruptcy petition is called the Debtor's Petition.
In order to file for bankruptcy you will need to contact your local court. They will give you the details of your nearest county court that deals with bankruptcy hearings. You can also find the contact details for your local court by visiting courtservice.gov.uk
.
It may be that you find yourself being forced to go bankrupt by your creditors, in this case your creditors will file the Bankruptcy Petition. This is called a Creditor's Petition, this petition can only be filed by people to whom you owe more than £750.
You will also have to pay £370 into court when you file for the petition. This amount covers the Court Fee and the Official Receiver's deposit. If a Bankruptcy Order is not made by your local court then the deposit will be refundable, but the Court Issue Fee is not.
By filing a bankruptcy petition, you will not be prevented from your creditors, as they can still contact you or try to sue you. An individual must file for bankruptcy at their local county court, after which an Insolvency Practitioner is appointed as Official Receiver. Mostly this Insolvency Practitioner is put forward by the creditors, this is usually the case if the majority of the debts are consumer credit debts such as credit cards and loans. There are other occasions when the Official Receiver is appointed from a list of local Insolvency Practitioners.
As same as an IVA, the Insolvency Practitioner needs to go through a fact finding and collecting all the relavant information. After which information and evidence is collected that gives an accurate representation of the debtor's financial position. This process is rigourous, it requires the debtor to attend meetings with the Insolvency Practitioner and to provide information and evidence about the following:
- Creditors (e.g. lender, type of credit, account number, balance, etc.)
- Assets (e.g. home, cars, expensive jewellery, etc.)
- Monthly income (e.g. salary, benefits, etc.)
- Monthly expenditure (e.g. rent, bills, car/transport, household, etc.)
- Background and household information
A date is set for the bankruptcy hearing, the creditors are contacted to be informed of the bankruptcy hearing, they are also requested to provide proof of the debts and final balances.
The debtor and the Official Receiver attend the Bankruptcy Hearing which is presided over by a magistrate from the county court. If the creditors or their appointed representatives wish they may also attend the hearing.
The magistrate reviews all the information provided by the Official Receiver and makes a judgement on the content of the Bankruptcy Order. The outcome is usually based on the combination of three elements:
The debtor and the Official Receiver attend the Bankruptcy Hearing which is presided over by a magistrate from the county court. If the creditors or their appointed representatives wish they may also attend the hearing.
The magistrate reviews all the information provided by the Official Receiver and makes a judgement on the content of the Bankruptcy Order. The outcome is usually based on the combination of three elements:
- A bankruptcy period varying from 12 to 36 months
- Lump sums to be realised by the sale of assets (e.g. home, car)
- Contributions from income each month
The standard period of a bankruptcy is 36 months but can be reduced to as little as 12 months in mitigating circumstances. Certain restrictions will apply during this period, e.g. the bankrupt person is prevented from having any form of credit such even a cheque book.
The lump sums will depend on what assets the debtor possesses at the time of the bankruptcy hearing. Normally there is a short period of time after the hearing when these assets are forced to be sold.
Monthly contributions are then worked out by calculating how much the debtor has left over after essential expenditure has been subtracted from his/her monthly income. The magistrates can be severe when deciding what counts as essential expenditure, however they tend to require that only 50-75% of the remaining income is paid towards the bankruptcy.
A bankruptcy notice naming the insolvent person is published in the national newspapers and the bankruptcy is recorded on the Insolvency Register and also with the Credit Reference Agencies. If the debtor is a tenant then the landlord is also informed.
The Official Receiver continues to supervise the bankruptcy after the hearing. The reciever will make sure that the assets are liquidated and the monthly payments are contributed. These payments tend to be paid directly by the debtor's employer to the Official Receiver. All funds accumulated are distributed amongst the creditors based on how much each of them were owed originally.
The lump sums will depend on what assets the debtor possesses at the time of the bankruptcy hearing. Normally there is a short period of time after the hearing when these assets are forced to be sold.
Monthly contributions are then worked out by calculating how much the debtor has left over after essential expenditure has been subtracted from his/her monthly income. The magistrates can be severe when deciding what counts as essential expenditure, however they tend to require that only 50-75% of the remaining income is paid towards the bankruptcy.
A bankruptcy notice naming the insolvent person is published in the national newspapers and the bankruptcy is recorded on the Insolvency Register and also with the Credit Reference Agencies. If the debtor is a tenant then the landlord is also informed.
The Official Receiver continues to supervise the bankruptcy after the hearing. The reciever will make sure that the assets are liquidated and the monthly payments are contributed. These payments tend to be paid directly by the debtor's employer to the Official Receiver. All funds accumulated are distributed amongst the creditors based on how much each of them were owed originally.
When should you consider bankruptcy?
Bankruptcy is seen as an extreme option to be selected only after other alternatives have been exhausted. A bankruptcy is usually considered and a plausible option in the following circumstances, for example:
- When setting up an alternative fails such as an IVA.
- When there are no assets, and no available income.
- When the debtor has retired, or has no future need for credit.
Other possible options for the seriously Indebted include IVA's
