If you are going bankrupt then there are steps that you can take to make the process more comfortable for yourself. I have detailed some pointers and considerations in a guide. Go to the preparing bankruptcy guide for more information.
Going bankrupt will help you wipe the debts that you are unable to repay. People often associate a fresh start with bankruptcy, this is not strictly true. It is a fresh start subject to the consequences that come with bankruptcy. It is important to realise this.
By going bankrupt you will be able to wipe the majority of your debts. You also gain an element of legal protection as the majority of your creditors will not be able to proceed with any enforcement action against you without permission from the court. Please note the word majority here. It is important to realise that not all debts can be wiped through bankruptcy. Similarly, some of your creditors can still take steps to recover their debts.
A common misconception is that companies go bankrupt. That is not true. In the UK bankruptcy only applies to individuals. Any individual can go bankrupt but you will need to meet the grounds for being able to petition. Luckily there is only one, which is that you are unable to repay your debts. You must owe more than £750.
When you go bankrupt you will be subject to the bankruptcy restrictions and you will also suffer from other implications. You will also be investigated by the Official Receiver unless it is deemed unnecessary, though it is rare not to be. All of your assets that are not exempt from the bankruptcy estate will come under the control of the trustee. They may have to be sold.
From the date that you go bankrupt you will be subject to bankruptcy restrictions which mean you cannot:
It is an offence to breach the bankruptcy restrictions.
These restrictions are most likely to affect you if you run a business or intend on running a business after bankruptcy.
It is important to remember that there will be an investigation into your affairs. If you meet the grounds for a bankruptcy restrictions order then these restrictions will be prolonged for a period of two to fifteen years. See the bankruptcy restrictions order page for more information.
It is unfortunate that going bankrupt costs, you cannot do it for free. Having said that it is arguably cheaper for you than other debt solutions. In recent times the bankruptcy fees have increased and if you are married then you will need to present two separate petitions and pay separate fees. See the filing bankruptcy page for more information.
As you are probably aware, going bankrupt is only the start. Officially your bankruptcy will last until your discharge, which in most cases will occur automatically on the first anniversary of your bankruptcy. It is at this point the debts are wiped. The Official Receiver or trustee may apply to the court for the suspension of your discharge if you have not fulfilled any of the obligations and duties placed upon you. You will then remain bankrupt until you have met specific conditions or until a specified point in time.
Although you are discharged a duty to co-operate with the trustee and the Official Receiver will still exist. Your assets can also be dealt with after your bankruptcy has been discharged.
When you go bankrupt certain duties and obligations are placed upon you by law. This includes things such as delivering up an inventory of your estate, disclosing income increases during your bankruptcy and providing business accounts for the previous three years.
If you fail comply with any of these duties then you may have your discharge suspended or be in contempt of court and liable to be punished accordingly.
To go bankrupt you need to:
Before taking the plunge it will help you to:
It is also worth mentioning that you cannot go bankrupt for free. Further to this you cannot go bankrupt online, only the forms can be completed.
The list goes on, please remember that information and advice are key.
Always go to someone that specialises in bankruptcy and has experience with alternatives to bankruptcy also. You need to make sure that bankruptcy is definitely your best option. You also need to make sure that you are fully informed of how bankruptcy will affect you and your family both now and in the future, particularly if there is a chance that you could encounter any problems.
For more information about the disadvantages of bankruptcy please go to the consequences of bankruptcy page.
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