I have written this list to help you becomes aware of some matters you should look into before going bankrupt. It is not a definitive list. You should speak to a professional adviser in relation to bankruptcy or any debt solution.
- The suitability of bankruptcy needs to be considered. Is it your best option? Look at the alternatives. Always seek professional advice from a qualified person.
- Have you considered the effects on your banking needs. Have a look at the bank accounts page for more information.
- Bankruptcy restrictions will apply from the date of the bankruptcy order. Are you aware of them? Do you know how will they affect you? The restrictions can be prolonged for a period of between 2 and 15 years via a bankruptcy restrictions order or a bankruptcy restrictions undertaking.
- Do you know what behaviour constitutes a bankruptcy offence. You are liable to be punished by imprisonment, fine or both if you are found guilty of such an offence.
- Do you know how your assets will be dealt with? Dealing with assets in bankruptcy can be complex. You may keep some, you may lose some. You can defend yourself against claims on your property if necessary. Some bankruptcy law exists to protect your property during bankruptcy. How about assets that you own jointly with someone?
- Any property that you acquire after the date of your bankruptcy but before your discharge may be claimed for the bankruptcy estate. It is called after acquired property. Have you and your loved ones considered your legal position regarding this?
- Some previous transactions, also called antecedent transactions, that you have made may be caught under insolvency law. Unfortunately this covers a range of transactions and will attract the attention of the official receiver and trustee. Have you made any? For some types of transaction you need to consider the last five years. As a consequence you may be penalised and the trustee may take steps to reverse the transaction. An example may include selling an asset to someone else for less than its market value. You should establish whether you have made such a transaction. You will need the help of a professional to do this.
- A benefit of bankruptcy is that it frees you of debts that you are unable to repay. However, not all debts can be wiped by bankruptcy. Do you have any that you will not be freed from?
- Do you know how bankruptcy will affect your income? Do your family understand that the financial stress may continue? You may have to pay over nearly all of your disposable income for a period of up to three years through an income payments order or an income payments agreement. Your profession may also prohibit bankrupts from practising. This will affect your earning ability. You may also be prohibited from holding certain licenses and memberships of clubs.
- Consider how your current business or future business may be affected. Ensure you understand the limitations of going back in to business if that is what you wish to do.
- A well known consequence of bankruptcy is considerable damage to your credit rating. Do you know how this will affect your future plans and what you can do to repair your credit rating? You may want to learn about credit repair and devise a strategy.
- Your bank account will most likely be frozen for a period of time or closed completely. Do you know how to make alternative arrangements for paying bills and banking?
- There will be an investigation into your affairs. Do you know what your duties are under the Insolvency Act and how the investigation will be conducted?
- Family life would have been affected in the period leading up to the bankruptcy as well as during the bankruptcy and after. Have you considered how to manage this? Bankruptcy can be a stressful and uncertain time that can affect the whole family. There will be many questions from the loved ones involved. Do you have the answers?
- An official receiver's interview will be conducted. It will help you to prepare and have answers ready for questions that are likely to be asked.
- There are a number of roles that you will come into contact with throughout bankruptcy. For example, the trustee and the official receiver. It would be helpful for you to know what their roles and powers are. You should also be aware of your own duties to ensure that you comply. Examples include delivering up your records and notifying of increases in your incomes within a specific time period.
As I wrote at the beginning, this guide covers some of the basic matters that should be covered when you seek advice. It is by no means a fully comprehensive list. Always make sure that you seek professional advice in relation to your debt. Making yourself aware of the bankruptcy process will help alleviate some of the stress and uncertainty for you and your family.