Bankruptcy Facts

Peter Lloyd - Bankruptcy Advice

You can petition for your own bankruptcy or a creditor can make the petition.
Either way once the order is made by the court the bankruptcy will usually last for 12 months, during this time you will be required to cooperate with the official receiver whose role is to identify any assets you have and use them to pay your creditors.
Your assets will be sold and the proceeds used to pay your creditors. This includes your home although you will be given up to 12 months to find alternative living arrangements. Sometimes depending on how much equity is available in the property your spouse or another family member will be allowed to purchase your share.
You can often keep your home if it is in negative equity, this is at the discretion of the receiver. Other assets that are needed for you to carry out your work or trade will also be exempt from the bankruptcy sale, these include items like tools of the trade, books, computers etc if used and necessary for work. You can keep your car, if you need it for work, live in a rural area and it has a value of less than £1500.00
You will need to make an appearance in court, this for many can be a daunting experience. However, the courts are not there to judge or lecture you and it is just a legal process. Once the order has been made the burden of debt and worry will be lifted.
You will be required to produce a statement of affairs, this outlines all of your assets together with your liabilities.
Depending on the amount of debt the court or the official receiver may choose to deal with the bankruptcy in an alternative way such as using an Individual Voluntary Arrangement. Also during the term of the bankruptcy which is normally 12 months you will need to cooperate with the receiver and declare your earnings. If it is deemed you have surplus income then this will be taken to help repay your creditors.
As an undischarged bankrupt you will not be able to obtain loans or credit of more than £500.00 without declaring your bankruptcy. There are other restrictions as well for instance you cannot do certain jobs or be a director of a limited company.