How do I make a formal application to go bankrupt?
In order to go bankrupt, you’ll need to identify the nearest county court to your place of residence which has legal jurisdiction to preside over bankruptcy cases. After you have done this, you will need to acquire two forms from the court; the 6.27 bankruptcy petition form, and the 6.28 statement of affairs form. These will need to be filled in without a single omission of the financial information it asks of you, and sent back to the court for them to evaluate. If they accept your petition, you will need to pay a compulsory £525 bankruptcy management fee, and a £175 court fee (though the size of this may be reduced depending on your circumstances and whether you are receiving an income benefit in some form).
Will my vehicle be seized?
Any vehicle you own will constitute an asset with re-sale value, and thus it is likely that it will be repossessed and sold in order to contribute toward your repayment of your debt. However, if you own a very old car with very little re-sale value, then your bankruptcy trustee might make the decision that it is not worth selling.
Under the terms of bankruptcy, you are allowed to retain ownership of itinerary in your home that are essentially to your day-to-day living. As such, if you can prove to your trustee beyond certain doubt that your vehicle is integral to your day to day living, then you might be able to retain ownership of it, or it will be sold off in order to repay a percentage of your debt and also purchase a less expensive vehicle for your transportation purposes.
Which of my assets will be sold off, and which will I be allowed to retain?
If you currently possess a number of valuable assets, then the Officially Receiver in your case might decide to appoint a licensed insolvency practitioner, or a trustee, in order to conduct an evaluation of the itinerary you own. The trustee will essentially identify all the belongings you own and determine whether they are integral to your day-to-day living, i.e. clothes, work related tools, items of furniture etc. (though in certain cases these might still be sold off in order to repay part of your debt and also replace them with cheaper alternatives). All items you own which are deemed to have re-sale value will most likely be sold off during your bankruptcy, whilst you might also be required to utilise equity in your property, your car and any outstanding cash in your current accounts in order to address your debt.
What happens to my property when I go bankrupt?
If you are a partial or full property owner, then the necessitation to sell your home as part of your bankruptcy will be entirely dependent on your unique financial situation. Essentially, your presiding trustee will need to make a decision on whether you will need to put your house on the market on the basis of how much of your debt you can repay by utilising your other valuable stocks, shares and assets. It should be noted that in certain cases, you might be able to slow down or stop the sale of your property if your stake in the building is less than £1,000, or if your dependents need time in order to find a new place to live.
If you are someone who rents accommodation for your housing purposes, your tenancy will usually be unaffected by your bankruptcy unless you have fallen into arrears with your rent payments or your contract with your landlord specifies that you leave your property if it ever arises that you need to go bankrupt.
If you have negative equity in your home and are the sole property owner, then it may not be necessary to sell your property during bankruptcy. This is because your presiding Official Receiver or Trust might decide that there is little value to selling it, and will transfer ownership of the asset back into your hands after they have finished their evaluation of its worth.
Will my bankruptcy impact my pension?
Under the terms of the Welfare Form and Pensions Act of 1999, your pension will be left unaffected by your bankruptcy and will not be utilised in order to contribute toward repayment of your debt. However, you should keep in mind that this does not apply to individuals who are not on an approved pension scheme and it might be worth asking a financial specialist whether the type of pension you use is protected under the act.
How will my credit rating be affected?
Bankruptcy can be regarded as a radical debt solution and will almost certainly have a negative impact on your personal credit rating. Under the terms of bankruptcy, you will need be allowed to take out any loans higher than £500 without first alerting the lender that you are undergoing the process at present, and this knowledge will likely inhibit you from accessing any meaningful amount of credit whilst your bankruptcy order is in place.
A note of your bankruptcy will also remain on your credit file for 6 years from the day you were officially declared bankrupt by the court, and this will inevitably impact your ability to acquire credit in the future. However, the severity in which you are impacted by your bankruptcy will be dependent on your financial situation after it has come to an end and how well you conduct your financial affairs thereafter.
I am a company director, how will bankruptcy affect my business?
- If you’re a director or owner of a limited company, then the businesses assets will not be affected by your bankruptcy through you will be barred from working in a director capacity for the duration of your order unless you acquire special permission from the court.
- If you’re a stakeholder of a limited company, then your stake be valued and then sold off if it is deemed to be worth a sufficient level of money to make a meaningful contribution toward the repayment of your debt.
- If you are a sole trader, then all assets that are currently under your ownership and are deemed to have re-sale value are at risk of be sold off in order to repay some of your debt. This includes assets that could be described as being integral to the day-to-day running of the business.