Bankruptcy - FAQ’s
How long will I be bankrupt for?
You will receive an automatic discharge within 12 months from the date you are
declared bankrupt. That is unless your discharge is suspended because you have not
cooperated with the person administering the bankruptcy - the Trustee.
However, if you are felt to have accrued the debt culpably, recklessly or dishonestly
then you may be subject to a Bankruptcy Restriction Order (BRO) for between 2-15
years.
What are the restrictions imposed on me whilst bankrupt?
During the time in which you are bankrupt and in which any BRO's apply, you are
prohibited from being a director of a company. Also, if you are self employed, then you
cannot trade in any other name apart from your own and you cannot apply for credit
for more than £500 without declaring your bankrupt status.
There may also be some restrictions imposed on your profession, especially if your job
involves working with money or holding a professional licence.
Will I have to pay anything back?
If you are deemed to have a surplus income, after providing for the reasonable cost of
living, then you will be asked to make a contribution towards the bankruptcy for a
period of three years.
Contrary to what many people think, you are allowed enough money to pay for your
reasonable living costs.
Can I be forced to sell my home or any of my belongings?
Personal possessions of a reasonable nature are excluded from bankruptcy; these
include your household possessions and tools of the trade which usually includes your
car if you can demonstrate that you need the car to get to work. The Trustee is entitled
to ask you to downgrade an item if they feel it is extravagant and introduce funds
raised into your bankruptcy. For example if you have a car on hire purchase, which is
judged to be too expensive and consequently affects the amount your creditors would
receive, then you will be asked to trade it in for a cheaper vehicle.
Assets which have value including your equity in any property, in excess of £1,000, will
have to be realised to pay creditors. The money is generally raised either through
remortgaging the property, or if that is not possible, by selling the property. If the
amount you need to raise is relatively small, it is always worth considering if family can
help you raise the necessary sums to prevent the sale of the property.
Is anybody going to come to my home?
It is unlikely that anybody will come to your home, although the Trustee does have the
power to investigate whether you have any other assets which you have not disclosed
in your statement of affairs.
Will my employer or anybody else find out?
Bankruptcy is public therefore advertised in a local newspaper as well as in the London
Gazette. Bankruptcy and BRO's are also recorded onto a register freely available to the
public via the internet. As such there is the possibility that others may be alerted to
your bankruptcy.
Your employer may find out about your bankruptcy because the Trustee can apply
direct to Court for an Income Payments Order which will instruct your employer to
deduct Income contributions direct from your salary. This can be avoided by agreeing
voluntarily to pay income contributions to your Trustee.
Is it possible to include ALL debts in bankruptcy?
Bankruptcy is binding on all creditors including credit card debt, utilities charges or
even your council tax. Matrimonial, criminal and student debt do, however, survive
bankruptcy and remain your responsibility after discharge.
How will bankruptcy affect my credit rating?
Bankruptcy will remain on your credit records for a period of 6 years. Once you receive
your discharge it will be recorded on your credit profile; this may not be done
automatically therefore it is beneficial to ensure your credit file is always kept up to
date. During the time you are bankrupt you are prohibited from obtaining credit for
more than £500 without declaring your bankrupt status.
With bankruptcy on your credit record, it is likely to affect your ability to obtain credit,
bank accounts with a cheque card and possibly even certain types of employment.
Once it is off your record then you can start to rebuild your credit, for example by
obtaining a small overdraft facility and making sure you do not exceed your limit. If
you established a reliable record with your bank, and you do need additional finance,
the bank may be prepared to consider a loan.
Once you have begun to rebuild your credit you should be able to apply for prime rates
again and then transfer balances from the sub-prime lenders you have been using.
Will I be allowed a bank account?
When you are made bankrupt your existing bank will be informed and your account
may be frozen. It is worth approaching your Trustee to obtain his/her permission to
unfreeze your bank account especially if you have no other bank account into which
you can pay your wages.
There is no restriction on operating a bank account but you will not be allowed an
overdraft facility, cheque book and or even a debit card. For help finding a bank that
will open an account, see bank account info.
To find the best solution for you Contact Simply Debt Solutions or Send Your Details to
The Debt Advisor today.
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