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Go Bankrupt Twice

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There is nothing to stop you going bankrupt twice. You may be thinking of doing so if you have got into difficulty with debt again. The Court will accept your application if you meet the criteria. However you may be worried that you will be penalised because you have been bankrupt in the past.

  • All the information you need if you are considering going Bankrupt twice
  • Will it last longer if you go bankrupt a second time?
  • What happens if you now have equity in your home?
  • Will your Pension be affected if you are nearing 55 or over?

Can you go Bankrupt twice?

Bankruptcy it is probably something you told yourself you would never do again. However going bankrupt twice is possible. Obviously it is not ideal but it is an option if you find yourself struggling with debt for a second time.

The first time you went bankrupt may have been some years ago. As such you could have got into debt again more recently for any number of reasons. Perhaps you have had unexpected health issues. Maybe your family circumstances changed or your business has failed.

Whatever the reason you are legally allowed to go bankrupt twice if you want to. The Court will accept your application as long as you are insolvent. There is no time restriction on when you can apply. As such it is even possible to go through the process within a year or two of your last discharge.

If you go Bankrupt twice will it last longer the second time?

The standard length of Bankruptcy in the UK is 12 months. However it is possible that this period could be extended. The Official Receiver can request a Bankruptcy Restrictions Undertaking (BRU). This would result in some of the restrictions of your bankruptcy being extended normally for an extra 3-4 years.

However simply going bankrupt twice does not mean that your second bankruptcy will be last more than 12 months. A BRU will only be issued given specific circumstances. Firstly if you do not co-operate with the Official Receiver. Secondly if you have made a preferential payment or transaction at undervalue before making your application at the Court.

If it is your second (or even third) bankruptcy the Official Receiver will want to understand why you are going through the process again. However if you co-operate fully and have not made preferential payments it is unlikely that your second bankruptcy will be extended. You will not be penalised simply because financial circumstances have turned against you.

Will you be forced to sell your home if you go bankrupt twice?

There are no rules that state you will automatically have to sell your home if you go bankrupt twice. The rules in this area are the same whether you are going bankrupt for the first or second time.

If you were a homeowner when you went bankrupt the first time around you may have kept your property. This could have been because there was no equity in it. Alternatively you might have bought back your interest from the Official Receiver at the time. If your first bankruptcy was a long time ago you may have bought a property in the mean time.

BE Tip: If your home you now own has equity in it then the Official Receiver will be required to release your share whatever the circumstances. This applies even if you previously bought back the beneficial interest in your home the first time you went bankrupt.

Rather than going Bankrupt twice should you consider a different solution?

Whether or not you decide to go bankrupt twice will very much depend on your personal circumstances. If your circumstances have changed you might be affected differently from when you went bankrupt before.

If you now have equity in a property you own or your car is worth more than £1000 these assets could now be at risk. In these circumstances you may want to consider an alternative solution which give your assets more protection. In addition if you are now nearing the age of 55 you need to consider what affect going bankrupt this time will have on your Pension.

You also need to consider your income and expenditure budget carefully. You may not have had to make payments towards your debts when you went bankrupt before. However this time if you have surplus income you will have to make a monthly payment towards your debt. This Income Payment Agreement will last for 3 years from the day it is put in place.

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