Before making your final decision to go Bankrupt it is important that you remember the following key advice.
Bankruptcy is not the only debt solution which might be suitable to resolve your debt problem. Before making your final decision to apply for Bankruptcy you should also consider the other available debt solution options.
If you become Bankrupt your bank account may be frozen either by order of the Official Receiver or due to Bank policy. As such you may need to open a new Bank Account before going bankrupt.
The duration of your Bankruptcy will normally be 12 months. However if after reviewing your monthly income and living expenses budgets the Official Receiver believes you have income that is surplus to your requirements you will have to pay this surplus towards your debts for 3 years. This Income Payment Agreement will therefore continue after the date your bankruptcy ends.
All of your unsecured debts are included in your Bankruptcy. However secured debts such as your Mortgage are not included. You must maintain the monthly payments towards your secured debts even after you are Bankrupt or you will risk the property or other asset that the debt is secured against being repossessed.
Bankruptcy will have a negative impact on your credit rating. A record of your Bankruptcy will remain on your credit file for 6 years. During this time and possibly for some time afterwards your ability to get new credit, a new mortgage or other financial services will be seriously affected.
Once you go Bankrupt your name, date of birth and address will be added to the Insolvency Register. This register is publically accessible and via the internet. As such anyone could discover that you are Bankrupt if they search the register for your name. Once you are discharged your name and details will be taken off the register.
During your Bankruptcy and for the duration of any Income Payment Agreement you will be required to live within a restricted living expenses budget. You will have to pay all of your surplus income towards your debts. If your income increases your payments may also increase for the remainder of your Income Payment Agreement.
If you are a home owner with equity in your property your share of this will normally have to be released for the benefit of your creditors. One option is for a joint owner or other third party to raise a sum equal to your share of the equity which is then given to the Official Receiver. However if this cannot be achieved and your share of the equity is significant the property may have to be sold to release it.
If your car is worth more than £1000 when you go Bankruptcy you may be required to sell it. You will be allowed to buy a replacement car up to the value of £1000 but any other proceeds of the sale will have to be given to the Official Receiver. If may be possible to avoid selling you car if a third party is prepared to pay the difference of the car’s value and £1000 to the Official Receiver.
You must make sure that you provide full and accurate information to the Official Receiver about your household income, living expenses and your debts. If you do not co-operate fully or if it comes to light that you paid creditors preferentially or gave away assets for less than their true value before you went Bankrupt then the restrictions of your bankruptcy could be extended.