Bankruptcy Annulments
Although an individual may be declared bankrupt, if their assets total more than their existing debts then they may have the option to have the bankruptcy cancelled by an order of the Court. This is called Bankruptcy Annulment.
There are three ways in which a bankruptcy can be annulled:
- The bankruptcy order should not have been made in the first place. This means being able to show that at the time the bankruptcy order was made the debt on which it was based did not exist or that it was not enforceable.
- All the debts and expenses of the bankruptcy have all been paid or security has been given for them to the satisfaction of the Court. This does not mean just the debt in the bankruptcy petition but all your debts. You will also have to pay the costs of the Official Receiver and of the trustee in bankruptcy if one has been appointed.
- And finally, that you have entered into an Individual Voluntary Arrangement since the bankruptcy order was made.
How to apply for an Annulment
To apply for an Annulment, you will be required to provide a written Witness Statement explaining why you feel the Bankruptcy Order should not have been made in the first place.
The Trustee in bankruptcy or the Official Receiver will then be informed of your application and a Court hearing will then take place to determine if the Bankruptcy can be annulled.
The bankruptcy can be annulled by the Court by either: –
- Your creditors have accepted your IVA proposal (there needs to be a 75% of the requisite majority of creditors voting who have accepted your proposal)
- The Bankruptcy Order should not have been made
- All costs, expenses and debts of your bankruptcy have been paid in accordance to the satisfaction of the Court.
Alternatively, all elements of the bankruptcy have been paid in full.
Decision of the Annulment is dependent on the decision of the Court and the circumstances surrounding the case.
Issues with an Annulment
The Court has the discretion to grant an annulment either on the decision the bankruptcy debts, expenses and costs have been paid to their satisfaction or the fact the order should never have been made.
If the annulment is successful and the Bankruptcy Order is cancelled, you are still liable for the costs of the annulment hearing and any costs incurred by the bankruptcy order. Any record of your bankruptcy will then be removed.
It is important to remember that if you are successful in having the bankruptcy order lifted, you will still be liable for paying any future debt.
What is the process?
In order to annul your Bankruptcy Order, we will liaise with your Creditors, the Trustee in bankruptcy and the Official Receiver on your behalf. We also will assist you by attending Court on your behalf.
We will charge a fixed fee to annul your bankruptcy which can significantly reduce costs compared to the financial impact of bankruptcy because your Trustee in bankruptcy will normally charge their fees on a time cost basis or on a percentage basis depending on what is approved by the creditors.
If Annulment is granted by the Court, you will regain control of your assets which would otherwise form part of the bankruptcy estate.
Next Steps
If you want to find out anything further about this topic then please feel free to call on 0330 236 9930, 0330 236 9938 or 07961 116321. All conversations will be in strict confidence. You can also email vee@navigatebr.com
This article is for information and interest only. It is not a substitute for full professional advice, which will take in to account the specific and individual circumstances. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.