Basic Bankruptcy Advice & Guide

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 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.

North East Derbyshire Citizens Advice Bureau have dealt with enquiries regarding problems with IVAs and continue to do so. In some cases we have advised and assisted clients in making the transition from IVA to Bankruptcy.

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 £450 and court costs of £150*

* If you are in receipt of some social security benefits or on a low income the £150 court costs may be fully or partially waived. To apply for exemption you will need to obtain and complete form ex160 which must be taken to court along with relevant proof of income (usually no older than 1 month).

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.

How you petition for bankruptcy

Find out which court you will need to present your petition (this will usually be the local county court in the area you have been living in for greater part of the last six months) or in London the High Court. If you are not sure you should always contact your local county court to confirm.

You will then need to obtain the necessary forms 6.27 (Debtors Bankruptcy Petition) & 6.28 (Statement of Affairs) & ex160 exemption form (if applicable), these can be obtained from your local court, some CABs or the Insolvency Service website.

You will need to fill in these forms (on line if applicable) providing all the information requested which includes all creditor details, current bank accounts, assets and your income and expenditure. Your local CAB may be able to assist you in completing and / or checking your forms for free if you have any difficulty or problems with them. Click here to view examples of completed bankruptcy forms 6.27, 6.28 & court fee exemption form ex160.

You should then contact your local court and confirm a bankruptcy hearing date.

What normally happens at court?

You will need to attend court (on time) taking your fully completed forms (some courts also request two copies) and the necessary fees (in cash). If you are applying for remission of court fees you will also need to take a completed ex160 court form and recent proof of income or benefits (usually dated within one month).

At your hearing a member of the court staff will swear your affidavit and check through your forms and take your fees. Please note that in our experience you will always be asked if you have had proper advice on bankruptcy at this stage. (You should always have sought proper advice on bankruptcy before making the decision)

If your forms are in order they will then be put in front of a District Judge who should make the bankruptcy order there and then, however he or she could ask for further information or suggest another solution (very rare). It is therefore very important that you have taken proper advice on bankruptcy and your other options as stated earlier.

On some occasions the District Judge may ask to see you to check you have had the right advice and that you understand the possible implications etc, you should not worry about this as in our experience the District Judges are extremely polite, helpful and reassuring.

After you have been adjudged bankrupt you should be issued with a standard order sheet which will contain your bankruptcy hearing details eg. B/R number, time and date, District Judge, etc. You should keep this safe and can use it to quote the details to any creditor that may happen to still contact you after your order. (You may wish to send this standard letter to your creditors informing them of your bankruptcy details)

You may then be contacted by someone from the Official Receivers Office while you are still at court or at a later date (this varies depending on the court). They normally ask you a number of basic questions and then confirm your interview date or this will be confirmed by post.

Please note on the day you may spend some time at court waiting around but don’t worry it will soon pass and you will be on your way home probably with a relieved smile on your face.

Official Receiver Interview

In our experience consumer bankrupts are usually interviewed over the phone (on time) which can be on your home phone or another designated number (some of our clients use the bureau office). However in some more complicated cases you may be asked to attend a face to face interview at the relevant Official Receivers Office.

The examiner who conducts the interview will go through your petition with you and ask you a number of questions relating to your bankruptcy. 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 try to answer all questions where you can and cooperate fully with the Official Receivers Office.

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.

When does 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 Restriction Undertaking (BRU) these will continue to run their course after your discharge (however these are relatively rare).

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

Useful advice/support forums on the Money Saving Expert website by Martin lewis

Disclaimer

North East Derbyshire Citizens Advice Bureau (NEDCAB) has tried to ensure that the information on this website is accurate. However, NEDCAB will not accept liability for any loss, damage or inconvenience arising as a consequence of any use of or the inability to use any information on this website. NEDCAB endeavours to provide a service of the highest quality; however, we cannot guarantee that our service will be uninterrupted or error-free. We are not responsible for claims brought by third parties arising from your use of this web site.