Individual Advice – Formal – Bankruptcy | DCABR

Sometimes Bankruptcy Is Your Best Or Only Option

Personal bankruptcy is where an individual is insolvent, and they cannot pay their ongoing unsecured liabilities. An individual can either file for their own bankruptcy, or one of their creditors can petition for the individual’s bankruptcy though the court. Once the person is made bankrupt, then the procedure is the same and the individual’s assets will be sold and the monies will be used to pay the creditors. Bankruptcy will free the individual from their debts, but at the cost of losing control of their personal assets.

A bankrupt’s affairs will be dealt with by an Insolvency Practitioner (IP) who is known as your Trustee and all of the bankrupts assets will vest in the Trustee, which means that the bankrupt will lose control of their assets. There are certain assets that the Trustee cannot touch, and we will be able to discuss this further with you.

Frequently Asked Questions

How do I make myself bankrupt?

The application is made on-line by completing a form and paying the current bankruptcy fee.

How long will I be bankrupt for?

You will receive automatic discharge after 12 months, however if you do not co-operate with your Trustee, the period can be extended.

Will I lose my house?

If the bankrupt has a spouse or children living with them at the matrimonial home, the Trustee cannot touch your property for the first 12 months, so long as you continue to pay the mortgage on it. After 12 months, the Trustee will obtain a valuation and a mortgage redemption statement to work out if there is any equity in the property. If there is equity, the Trustee will write to you and any joint owner of the property to enquire if they will buy the equity from the Trustee. If an amount cannot be agreed, the Trustee can go to court to obtain an order for possession, sale and eviction. The Trustee has 3 years to deal with any equity in the property. However, if the bankrupt lives on their own at the property, the Trustee does not have to wait for the first 12 months to elapse and if there is any equity in the property, it will be at risk of being sold by the Trustee.

Can I still work if I am self- employed?

Yes, but the Trustee will ask for you to deliver up your books and records and any surplus income can be called upon to be paid into your bankruptcy, which is known as an income payments agreement, or order. The Trustee may decide that the business is not viable, and if so will decide to close the business down and sell the assets of the business, but this will be discussed with you by the Trustee.

What are the restrictions when you are bankrupt?

Whilst in the bankruptcy period, you cannot:

Borrow more than £500 without telling the person that you are an undischarged bankrupt
Act as a director of a company without the court’s permission
Create, manage or promote a company without the court’s permission
Manage a business with a different name without telling people you do business with that you are bankrupt
Work as an insolvency practitioner

Can creditors take any court action against me whilst I am bankrupt?

No, unsecured creditors cannot take any action against you whilst you are in the bankruptcy period and their claim will be dealt with by your Trustee. Therefore, bailiffs cannot attend your home and distrain on any personal assets that is caught in the bankruptcy. A secured creditor can still take legal action against you whilst you are in the bankruptcy period and it is vital to continue to pay any secured loans, as your property will be at risk if you fail to make payments to secured creditors.

Will I be debt free when I am discharged from bankruptcy?

Yes, all your unsecured debts will be written off, but any secured debts will still remain with you on your discharge from bankruptcy.

Individual Advice Formal Bankruptcy