Can I get a bank account if I am made bankrupt?
Usually yes. Most people are able to obtain a basic bank account in this situation, although only with a limited number of banks. The Co-Operative Bank and Barclays Bank state that only a 'record of fraud' should prevent an individual obtaining access to their basic bank accounts.
It is important to advise the Official Receiver that you have opened a basic bank account when they interview you. Often the Official Receiver will not instruct the bank to close the account although the bank themselves may well take this decision themselves.
If your intention is to petition for bankruptcy and you are in the process of applying for a basic bank account it is often advisable to be honest with the bank about your intentions. The bank may well be satisfied with this and will be aware that you have been honest and open with them from the start.
Can I keep my car when bankrupt?
If your car is needed to get to work, or another practical way, then the official receiver may well allow you keep it. The vehicle probably has to be worth less than £2500. Higher value vehicles can still be kept sometimes if they are necessary for the running of a business, or is necessary for your particular circumstances e.g. a 4 x 4 vehicle in a rural location.
The Official Receiver or Trustee may decide to sell a more expensive car, and allow you to buy a cheaper one from the sale proceeds. There is also an option that they will sell a low value vehicle if they decide that public transport is suitable, and the car is not really needed.
Will my partner’s bankruptcy affect me?
So long as your partner’s debts are not in your name then it should not affect you. Even when couples live together in the same house and one person goes bankrupt then this will not alter the other person’s financial status.
Credit ratings should not be affected if there is no financial connection between you. However, there may be practical difficulties if bank accounts and debts are joint. Please contact us if this is a concern.
Is it true if I file for bankruptcy I will lose half of my wages to pay my debts?
If you are bankrupt the Official Receiver will determine how much extra money you have available each month after meeting 'reasonable' expenses. You may be required to repay a portion of that extra money for one to three years. This may be forced upon you by an Income Payment Order (IPO) that the Official Receiver applies for through the court. Alternatively, it may be an agreed Income Payment Agreement (IPA).
If the court feels you have been reckless with your financial affairs they can issue a bankruptcy restriction order requiring payments for up to fifteen years.
Can I go to prison if I go bankrupt?
No, going to prison is not part of the process if you go bankrupt. Although there is such a thing as criminal bankruptcy this is very rarely seen.
Bankruptcy offers individuals that do not have any other real option of dealing with their debts with a legal method of getting out of debt.
If debts have arisen due to reckless behaviour such as gambling for instance, then the terms and restrictions of a persons bankruptcy order can be extended for a maximum of 15 years.
Such extensions are referred to as either bankruptcy restriction undertakings or bankruptcy restriction orders. If a person breaks the terms of a bankruptcy restriction order only then is this seen as a criminal offence and a custodial prison sentence may be possible.
How much will it cost to make myself bankrupt?
You may have to pay 3 fees when you take your petition and statement of affairs to court:
The court fee of £150. In some circumstances the court may waive this fee; for example, if you are on Income Support. If you are not sure whether you qualify for a reduction in the fee or whether you are exempt from paying the fee, court staff will be able to advise you.
The deposit of £325 towards the costs of administering your bankruptcy. This deposit is payable in all cases.
The fee to swear the statement of affairs. In a county court, no charge is made to swear this affidavit, which is part of the statement of affairs. But in the High Court or before a solicitor there is a £7 charge.
If you are a married couple and you are both applying for bankruptcy, you will each have to pay separate fees. If you were in business as a partnership, each partner will have to pay separate fees, unless all the partners apply for a joint bankruptcy petition under the Insolvent Partnerships Order 1994 (Form 16). Form 16 is available from the court or a copy can be printed from The Insolvency Service website at: www.insolvency.gov.uk.
The above fees should be paid in cash, postal orders or by a cheque from a building society, bank or solicitor. Cheques should be made payable to HMCS (Her Majesty’s Court Service). Personal cheques will not be accepted.
What happens after the bankruptcy hearing?
A bankruptcy order is generally made straight after a person has gone before the Judge in a county court for a bankruptcy hearing.
The Official Receiver will usually want to meet with the bankrupt shortly after the bankruptcy order has been given. The role of the Official Receiver is to assess the finances and assets of the bankrupt and to decide how best to distribute any assets within the bankrupts estate. They will also want to assess the bankrupt’s ability to make regular monthly payments towards the creditors.
If a bankrupt has sizeable assets then the Official Receiver will pass the bankruptcy case to a commercial Insolvency Practitioner to administer on behalf of the creditors.
A person will remain a bankrupt until their date of discharge. In most cases this will be no more than a 12 month period although Bankruptcy Restriction Orders (BRO) can be extended for a period of 15 years.
What are my duties as a bankrupt?
When a bankruptcy order has been made against you, you must do all the following things:
Provide information about your financial affairs to the Official Receiver. (The court will give you the address and telephone number of the Official Receiver.) You will need to contact the Official Receiver as soon as possible once the bankruptcy order has been made. If you cannot go immediately to the Official Receiver's office, he or she will ask you questions over the telephone. You may also have to attend an interview at the Official Receiver's office at a later date.
Collect and hand over your assets to the Official Receiver, with all your account books, records, bank statements, insurance policies and other papers relating to your assets and debts.
Tell your trustee in bankruptcy about any assets and increases in income you receive during your bankruptcy.
Stop using your bank and building society accounts, credit cards and similar accounts straight away.
Not get credit of £500 or more from any person without first telling them that you are a bankrupt.
Not make payments direct to your creditors for money that you owed before the bankruptcy order was made.
If you do not co-operate with your trustee there is a danger that you could be arrested.