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talk to me about bankruptcy please(3 Posts)
had a thread on here a month or so ago about house being reposessed due to me fleeing violent ex partner and the morgage not being paid. spoke to cab and they said one of my options is bankruptcy or paying off what i can afford each month. the debt is over 30k.
anyone been through bankruptcy and can give me some advice please.
I've not been through bankruptcy but worked in the industry for the best part of a decade before I decided that I wanted to do something a little less depressing for a living so I may be able to help.
Bankruptcy is presented as a fresh start, particularly since the Enterprise Act changed the length of bankruptcy to 1 year (down from 3) a few years back. It wipes out most of your debts - there are a few exclusions such as student loans, and gives you the opportunity to start afresh. The shortfall on your previous property would be included as well as any loans, credit cards, overdrafts, catalogues and other consumer debts. If you have any assets these would be realised for your creditors - in most instances this is a house or a car valued at more than £1,000. Your household furniture, tv, computer, basic runaround car and clothing are exempt from proceedings. If you have a house this can't be sold for at least 1 year, and if you work with the trustee in Bankruptcy it can be a relatively painfree experience - no more than say moving house yourself. After one year you're discharged from bankruptcy and have a clean slate.
You may be asked to contribute to your bankruptcy by way of an income payments agreement, whereby you would be asked to pay a percentage of your disposable income each month for three years. This is worked out on a case by case basis and won't be unaffordable.
Whilst you are bankrupt there are a number of restrictions on you, the most relevant of which to most people is that you must let lenders know that you're an undischarged bankrupt if you apply for credit over £500, if you want to trade as self employed you must do so under the name you were adjudged bankrupt, and that you can't be director of a limited company without permission from the courts. These no longer apply when you've been discharged - that is after one year. It is possible, however, for these restrictions to be extended beyond one year if you are deemed to have been reckless, culpable or dishonest and an application for a bankruptcy restrictions order is made. These are quite unusual.
The process is fairly straightforward. You need to fill out a statement of affairs and make an application to court. This costs in excess of £500, but some charities help pay this and a lot of people extend their overdrafts to pay the court costs. The statement of affairs details your assets, liabilities, income, expenditure and reasons for bankruptcy. The judge reviews this and makes the order and the case is passed to your local Official Receiver's Office. You may then be interviewed, either over the phone or in person, and a report is sent to your creditors. The order is also advertised in the local paper and the London Gazette. It is at this stage that you may be asked to pay contributions. It is quite painless and the staff are mostly sympathetic to your situation.
Your bank account will be frozen as a result of the order and you'll have to open a new one after the order is made, or make sure your benefits/salary are paid into a friend or family member's account for the first few months as if it is paid into a frozen account it is a pain in the arse to release.
It does stay on your credit record for 6 years, but if you've already had a repossession order made against the house I doubt your credit record is looking too shiny at the moment.
Feel free to PM if you want more specific advice/help.
PS - sorry for the epic post.
Martin Lewis, moneysavingexpert has some brilliant advice on his site, there's a great forum there full of people with loads and loads of great advice. We've just been through bankruptcy and all the fantastic advice we got on there helped us massively through the whole process
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