BANKRUPTCY

An individual can be made bankrupt by anyone to whom they owe more than £750. If you are under pressure from a creditor who is threatening to make you bankrupt, you need advice immediately.

It is nearly always preferable for you if you declare yourself bankrupt, rather than allow someone else to force you into bankruptcy. This is seen as taking a responsible attitude to you debts and also puts you in more control.

When you are bankrupt, your bankruptcy is usually discharged automatically after one year.,in some cases less, I was fully discharged after six short months to re-build my life.Longer periods can be imposed if it is thought that the bankrupt person acted irresponsibly or unlawfully.

DONT under any circumstance go out and spend money you don't have on your credit/debit card or bank account in the hope it will be written off at your bankruptcy hearing, it wont. In all probability you will be committing a criminal offense by acting irresponsible.

If you believe you are insolvent (this means you cannot pay your debts as they fall due) you must not sell assets at less than their true value, and you must take great care what you do with the proceeds of any sale. Also, you must not take on new debt which you know you cannot repay, and you must not use your money for non-essential purchases (e.g. a cruise,TV,new car etc)

Assets owned at the date of bankruptcy become the property of your Trustee in Bankruptcy (an Insolvency Practitioner or the Official Receiver). Where an asset is likely to increase in value, (e.g. a house) it is advisable to arrange that your partner or other close friend purchase your share of the equity in the asset from the Trustee as soon as you are bankrupt. This prevents the Trustee coming back to you later demanding the asset at its value then. The Trustee has up to three years to realise your assets, so that your house could be worth much more after this period. A settlement of the matter earlier is almost always the best route, but it must be done carefully and with a proper valuation, or the transaction will not be permitted by the Trustee.

As a bankrupt, you are not allowed to be a director, shadow director or officer of a limited company, and you cannot borrow more than £500 (including a purchase on credit terms) unless you inform the lender that you are a bankrupt.

At the time you are made bankrupt, all of your bank accounts will be frozen (so that you will not have access to any money in them). You will need to either get the Trustee to release the account or open up a new one. Many banks routinely close all accounts of bankrupt customers, so it can be difficult to open new accounts.

The Co-Operative bank are recommended as they provide a cash minder account for bankrupts.

You can prepare for bankruptcy yourself. Any County Court will give you a free bankruptcy pack explaining the process. This pack is complicated, and you must attend Court in front of a Judge to swear that you have completed it accurately and completely. A Court fee will be payable. Currently, the fee is £150, plus £335 administration charge. If you are on a low income or benefits, you can apply for exemption from the court fee, but will usually still be expected to pay the administration charge.

What if you cant pay the fee? If you are going bankrupt its unlikely you will have £475 sitting around. If you used to be employed at any point check to see if there is a trade association that supports your industry. Somethimes they have "charity" schemes for ex employees

You will then be called to meet with the Official Receiver, who will question you about your circumstances and assess what contribution (if any) you must make from your income to pay your creditors. If you have to make a contribution, this will last for three years, even though you will probably be discharged from the bankruptcy after one year or less.