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VOLUNTARY BANKRUPTCY
How much will it cost?
£450 cash (£140 fee plus £310 deposit) for a single bankruptcy. Husbands and wives must apply separately, ie £370 each. If you have traded as a partnership within the last 3 years you can apply for a joint bankruptcy for which the fee is £400.
How much do I have to owe before I can apply for voluntary bankruptcy?
There is no minimum. However, if a creditor wants to make you bankrupt he can only do so if you owe at least £750. Two or more creditors can join together if they are owed more than £750 in total.
How long will I be an undischarged bankrupt?2 years if you owe £20,000 or less.
3 years if your debts exceed £20,000 or a creditor makes you bankrupt.
Do I have to apply to be discharged?
No. Discharge is automatic, if you have fully co-operated with the Official Receiver and you were not declared bankrupt in the previous 15 years. If you want a Certificate of Discharge you must apply to the relevant County Court for this.
How do I apply for bankruptcy?
Collect, or ask the Court to send you, a “bankruptcy petition” and make an appointment for your application to be heard. Brighton County Court deals with Bankruptcies in the Horsham area.
Complete the "statement of affairs" form which is issued with the bankruptcy petition. This entails providing information as regards your income, expenditure, details about your creditors and your assets.
Go to the County Court dealing with bankruptcy at the appointed time – try to be a little early to give yourself time to complete the formalities in the General Office before seeing the District Judge. The initial stages are very nformal, usually conducted by a clerk at the County Court.
The County Court District Judge will hear your petition and will make an order for bankruptcy there and then if there is no way you can pay your debts.
District Judges do not have to grant an order for Bankruptcy and a petition may be refused.
After a refusal you must wait at least a year before applying again. If Bankruptcy is refused the deposit (£250) part of the costs will be refunded, but not the fee (£120).
You will be bankrupt from the moment the District Judge makes the bankruptcy order.
What happens next?
The County Court will contact the Official Receiver's Office and ask you to go round there immediately.
What debts can be included on my bankruptcy?
All debts, including Income Tax, Council Tax, Gas, Electricity, Water, Mortgage and Rent arrears must be included as well as credit debts such as bank loans, overdrafts, credit cards, catalogues and HP agreements.
Are there any debts for which bankruptcy is not relevant?
Yes, but you must still show them on your bankruptcy form. Debts which are not covered by
bankruptcy are:-
Fines levied by the court as a result of criminal offences (eg. traffic offences, nonpossession of a TV licence).
Maintenance or other family court orders (CSA).
Debts incurred through fraud.
Loans from the Social Fund and Student Loan Company and benefit overpayments.
Debts arising from Personal injury claims
Will my name be in the papers?
Bankruptcies are normally advertised in the London Gazette and whatever local newspaper the Official Receiver thinks fit.
What will happen to my earnings?
Your earnings are not taken over automatically as a result of bankruptcy. Most people applying for voluntary bankruptcy have no money left over after paying essential living expenses, and so none of their earnings are taken to pay creditors. However, if the Trustee believes that you can afford to make payments towards your debts, you will be expected to make monthly payments during the period of the Bankruptcy.
Once I am bankrupt what can't I do?
Obtain credit of more than £250 without disclosing that you are an undischarged bankrupt.
Carry on business in a different name without disclosing the name under which you were made bankrupt.
Be concerned in promoting, forming or managing a company without the Court’s permission – whether formerly appointed as a director or not.
What about Electricity and Gas arrears? Will I be cut off?
Any money owed to the Gas and Electricity companies must be included in your bankruptcy. This means that any money outstanding between your last quarterly bill and the date of your bankruptcy will be included. By law the fuel companies cannot cut off your supply because of money owed to them before the date of your bankruptcy, so your fuel will not be disconnected as a result of bankruptcy. However, the Gas and Electricity companies do not normally allow undischarged
bankrupts to have quarterly accounts. So you must:
(a) register for a new supply for each service
(b) arrange to have a pre-payment meter installed.
All gas or electricity used after the date of bankruptcy is your responsibility.
Will I be able to have a telephone?
British Telecom do not lease telephone lines to undischarged bankrupts and advise people in this situation to register the telephone in someone else's name. This named person will take the legal responsibility for paying bills.
What will happen to my Occupational or Private Pension?
Full details of all Pensions must be disclosed. The Official Receiver may apply to register an interest against a pension and may make claim at a later date. This is a complicated area and, if applicable, further specialist advice should be sought.
What will happen to my assets?
Generally, ALL your assets will pass to the Official Receiver. In the case of jointly-owned assets, only your interest is transferred to the Official Receiver. This applies particularly to jointly-owned property.
Note that assets acquired after the bankruptcy but before discharge, known as "after-required property", will be transferred to the Official Receiver. This would include an inheritance received under a Will and it may be desirable, if receipt of an inheritance is likely during the period before discharge, to arrange for provisions in the Will to take account of this.
Proceeds of life policies following the death of an undischarged bankrupt, if received by the bankrupt's estate, will also be transferred to the Official Receiver.
Will I lose my car?
It depends on its value. If you own an old banger which is essential to get you to work you will probably be allowed to keep it. If your car is worth more than a few hundred pounds it is likely that it will be sold and the proceeds used to pay off creditors.
Will I lose ordinary household goods?
No. Most household items will not be sold. Unlike bailiffs the Official Receiver is not interested in seizing these types of goods, as the second-hand value is very low. He will take high value goods such as antiques, jewellery, cars, caravans and boats.
I am an Owner Occupier. What will happen to my house?
If you own your own house, the Official Receiver will regard your house as an asset and he could sell it to pay your creditors. If you have a family the house may not be sold for at least a year. If you live by yourself the house may be sold straight away. If your home is jointly owned, the Official Receiver may try to sell your home to the other joint owner - i.e. get the non-bankrupt owner to buy out your share.
My house is worth less than the outstanding mortgage. What will happen to it if I go bankrupt?
As long as the house has no equity, (i.e. all the money from any sale would go straight towards your mortgage and secured loans) the Official Receiver may not force the sale of the house. However, the house remains an asset held by the Official Receiver, and if prices rise he may then ask for the house to be sold, EVEN AFTER YOU HAVE BEEN DISCHARGED FROM BANKRUPTCY.
I am in arrears with my mortgage and there is no equity in the property.
How would bankruptcy affect me?
As there is no equity in your property (i.e. its sale value will not even cover your outstanding mortgage) the Official Receiver may not sell at this time. However, if you are in arrears with your mortgage, the Building Society/bank/financial company can still decide to repossess your house and sell it to recover the debt owed to them.
If the Building Society allows you to remain in your house, you can continue to pay current mortgage instalments. However, the house will still be an asset held by the Official Receiver. If, at some time in the future, the value of the house rises the Official Receiver may then ask for the house to be sold to release money to go to your creditors. THIS MAY HAPPEN EVEN AFTER YOU HAVE BEEN DISCHARGED FROM BANKRUPTCY.
I live in rented property and have no rent arrears. I owe many thousands of pounds to other creditors.
If you are a council or housing association tenant, and you have no rent arrears, your housing should be safe even if you go bankrupt. But you should check your tenancy agreement in case there is a provision to end the agreement in the event of your bankruptcy. Some private landlords will not grant a tenancy to an undischarged bankrupt.
I owe rent. How will bankruptcy affect my housing?
All the debts you have incurred on the date of your bankruptcy must be included in the petition. This includes Rent Arrears and you may not pay your Rent Arrears off after you have been declared bankrupt in order to safeguard your house, without the permission of the Official Receiver. The Official Receiver will decide whether you can afford to pay any money from your income towards all your debts including your rent arrears.
Technically you are in breach of contract with your landlord who can seek to evict you if he wishes. If you are a housing association tenant, this is unlikely, but it is within the association’s remit to ask a County Court to grant an eviction order in such cases. Whether the County Court grants such a request is a matter for the court to decide.
Homelessness
If you think you may qualify for re-housing by the council (and only certain groups qualify) you should check with the Council before making yourself voluntarily bankrupt, as the council may consider you to be intentionally homeless, and therefore not accept responsibility to re-house you.
Can I have a bank account once I am bankrupt?
Yes. The Official Receiver may allow you to keep a bank account open for current transactions. On your bankruptcy petition form there will be a space for details of bank accounts etc.
You should mark against the one you wish to be kept open "Needs to be kept open for current transactions". However, it is at the discretion of the bank as to whether they will wish to continue servicing your current account and whether they decide to issue you with a cheque book. You will not be allowed a bank or credit card. If you already have debts with the bank it may be advisable to open an account elsewhere for current transactions. If you are bankrupt you can open a bank ccount, but you must tell the bank about your bankruptcy and the bank has a legal duty to inform he Official Receiver.
Can I borrow any money while I am an undischarged bankrupt?
You can borrow money, but if the sum is for £250 or more you MUST INFORM THE LENDER HAT YOU ARE AN UNDISCHARGED BANKRUPT. If you fail to do this you will be ommitting a criminal offence.
When I have been "discharged" as a bankrupt will I be able to get credit?
You may still find it difficult to obtain credit even after you have been discharged. However, given time and sensible financial management of your affairs this situation should ease, and it is possible or discharged bankrupts to arrange mortgages. Obviously, obtaining credit of any sort once you have been bankrupt is going to be more difficult than if you had not been bankrupt.
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You are welcome to ask for further information and advice on all the points in this leaflet from the
CITIZENS ADVICE BUREAU
Lower Tanbridge Way
Horsham
West Sussex RH12 1PJ
Tel: 0870 126 4080
Email: contact@horshamcab.org.uk
Website: www.horshamcab.org.uk
Opening Times: Monday 10.00 - 6.30 p.m.
Tuesday to Friday 10.00 - 4.00 p.m.
HENFIELD The Henfield Hall Monday 10am-1pm
BILLINGSHURST Village Hall Tuesday 10am – 1pm
STEYNING Steyning Centre Wednesday 10am-1pm
STORRINGTON Chanctonbury Hse
Church Street Thursday 10am -1pm
PULBOROUGH Pulborough Medical Group
95 Lower Street
Wednesday 10am – 1pm
Tel: 01798 872815 (by appointment only)
Remember - our advice is
IMPARTIAL
CONFIDENTIAL
INDEPENDENT
and
FREE!
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