Basic Bankruptcy Advice and Guide

If you haven't already had previous advice, it is highly recommended that you answer all of the questions on our Debt Options page which will help you decide which option to follow. You should carefully consider all options before deciding to continue further.

If you have any doubts, you should get full, independent, professional advice.

Resources


Introduction

Bankruptcy can be the best option for dealing with debts in many cases allowing people to clear their debts and make a genuine stress free new start with their lives. It is a perfectly legitimate way of dealing with your debts and should always be considered along with all other options available.

There now seems to be much less stigma attached to bankruptcy with many people now choosing this route as a long term solution to their debt and financial problems.

Please note you should always seek proper advice on all your options from the Citizens Advice Bureau (CAB) or another recognised agency / professional before deciding on bankruptcy as a method of dealing with your debts as there are advantages, disadvantages and possible serious implications.

Some advantages of bankruptcy

Some disadvantages of bankruptcy

How are you made bankrupt?

* If you have problems with your IVA and / or feel that you may not have been properly advised before entering into it you may still be able to petition for bankruptcy yourself, however you should always obtain proper advice first.

Please note there is clear evidence of organisations and individuals contacting those who are bankrupt or subject to IVAs after obtaining their details from the Insolvency Service Register. It appears that some of these organisations and individuals are offering services and / or solutions (often with a fee or costs involved) that they claim would be beneficial to those already subject to bankruptcy or IVAs.

Our position regarding the above is that you should always contact your Insolvency Practitioner and / or seek independent, impartial advice from a recognised agency such as the Citizens Advice Bureau before making any decisions or committing yourself to any course of action.

How much does bankruptcy cost?

There are fees and costs to pay if you wish to petition for bankruptcy yourself, these are Official Receiver £550 and adjudicator fees of £130

Possible help with bankruptcy costs / fees

There are a number of charities that may help with bankruptcy costs and fees depending on eligibility (examples below).

Please note you will usually need the assistance of a recognised Debt and Money Advice Worker in completing applications relating to the above.

Official Receiver Interview

What happens when you are interviewed by the official receiver

In our experience bankrupt people are usually interviewed by an examiner over the phone which can be on your home phone or another designated number (some of our clients use the bureau office). However in more complicated cases and on other occasions bankrupt people may be asked to attend a face to face interview at the relevant Official Receivers Office.

After introducing themselves and explaining their role in your bankruptcy the examiner will normally confirm your personal details and go through your petition asking a number of questions relating to your bankruptcy (possible official receiver examiner basic question examples below).

Assets

Unsecured creditors

(Catalogues, credit cards, loans, overdrafts etc)

(Questions probably repeated for all credit cards, loans and similar questions for other unsecured creditors)

Employment and Income

Outgoings

Property

Causes of bankruptcy etc

The above questions are just loose guide basic examples to give some idea of the interview procedure with cases and questions being different depending on individual circumstances.

The Official Receiver will inform your creditors of your bankruptcy and send them a report on your financial situation. The Official Receiver will agree what will happen to any valuable assets you may or may not have and discuss with you if any Income Payment Arrangement (IPA) may be relevant in your case.

It is our experience that the Official Receiver Examiners are polite, reassuring and helpful and are not there to judge you and our advice is that you should not worry and always try to answer the questions where you can and co-operate fully with the Official Receivers Office.

(For guidance purposes it is good practice to have a copies of your completed bankruptcy forms to hand at the time of your interview with the examiner / official reciever).

Income Payment Agreements and Orders (IPAs / IPOs)

When someone becomes bankrupt, the trustee will make an income and expenditure calculation as to whether the bankrupt person can afford to make any payments towards their bankruptcy debts in the form of an Income Payments Agreement / Order.

Income Payment Agreements and Orders usually last for a period of 3 years.

For further information, see our guide on IPAs/IPOs including a Payment Order Calculator.

When does my bankruptcy end?

When will my bankruptcy end?

You will normally be discharged from bankruptcy after one year or in some cases as early as 6 months, however if you have an IPA / IPO you will continue to pay for up to 3 years.

If you are subject to a Bankruptcy Restriction Order (BRO) or have agreed to a Bankruptcy Restrictions Undertaking (BRU) these will continue to run their course after your discharge (however these are relatively rare).

* If you have any problems or issues with the Official Receivers Office or need further advice contact the CAB or another suitable agency.

Bankruptcy Contacts and Publications

Insolvency Service Information and Publications

The following publications are available from the Insolvency Service website, which can be searched for specific information.

Information on Bank Accounts

Credit Files Reference / Repair Information

Bankruptcy in Scotland

Free Bankruptcy and Debt Advice / Assistance

Bankruptcy and Debt Advice/Support Forums / News

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