How do I become bankrupt?
If you’re struggling to repay your debts, bankruptcy could give you a fresh start. The process can be complex, so it’s important to get expert advice before you take this step. In the UK, there are two types of bankruptcy – individual and corporate. This page talks about individual bankruptcy, which is for people who can’t pay their debts. It usually lasts for one year and your assets are sold to pay your creditors. If you’re considering bankruptcy, you should get advice from a qualified insolvency practitioner. They’ll be able to help you understand the process and decide if it’s the right option for you.
The stages of bankruptcy: An overview
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Understand whether bankruptcy is the correct route for you.
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Completing the bankruptcy form and settle fees.
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Withdraw essential living costs from your bank account before it is frozen.
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If the bankruptcy order is made, it will be in effect immediately.
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Cooperate with your official receiver who is in charge of managing your bankruptcy.
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As you bank account is frozen, open a basic bank account or get a pre-paid debit card.
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Once the bankruptcy is finished, you are discharged.
Yes, anybody can help you with the form. Make sure you read the entire form before submitting it. Wrong information on a form is a crime.
As long as it is a type of debt that qualifies for bankruptcy, you should declare it to the person dealing with your bankruptcy as soon as possible.
As long as it is an asset that was yours before bankruptcy, tell the person dealing with your bankruptcy as soon as possible.
They will extend the 28 days by another 14 and in this period ask you for more information in order to make a final decision on your application.
Because it is not believed that you qualify for bankruptcy against its criteria’s. This will be explained to you.
The same appeal will only be heard once. For example, if you appeal for a certain reason, you can’t re-appeal for that same reason.
Your application would have been rejected on certain grounds. If you disagree with those grounds, you need to provide evidence for it.
Yes you can, but this would be futile if you have no new information to provide, because the Court will reject it again for the same reasons and you’ll have to pay all the fees again.
It means your bankruptcy application has been successful.
The bankruptcy takes effect immediately.
This is someone known as the official receiver.
What is the role of the official receiver?
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They will take control of your money and qualifying property.
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Although bankruptcy makes you exempt from paying the qualifying debts, they will assess whether you have the capacity to make some contributions towards this.
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Investigate your conduct, especially fiscal decisions.
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Make your bankruptcy public by advertising it in the London Gazette.
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Make your Creditors aware that you are bankrupt.
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Distributing any monies raised amongst your Creditors.
Within two working days of your bankruptcy order being made.
To readily comply and cooperate with whatever is asked of you.
What might an official receiver ask me to do?
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Complete a questionnaire.
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Attend an interview.
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Attend an exam.
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Attend a Creditors’ meeting.
It will be various questions about your finance situation. You’ll have to answer the questions and attach any supporting evidence.
There is no set time limit. Your official receiver will set a deadline depending on the demands of the questionnaire.
Usually, the official receiver will accept any reasonable request to extend the deadline, such as giving you more time to gather supporting evidence and access your records to answer the questions.
Within 10 working days of the bankruptcy order.
Over the phone.
It can take as long as three hours, depending on how complex a case is.
There are no set questions. It’s more of a discussion than an interview. It will review your submitted questionnaire, you’ll be asked more about your finances and how you got to the point of needing bankruptcy and they will also take any questions you have.
It is not an examination in the traditional sense. You have go to Court and on oath testify that everything you have said about your situation is correct.
Unlike the questionnaire and interview, a public examination is not compulsory.
If 50 per cent of your Creditors request the public examination, it will have to take place. Your official receiver may also ask for it if you are making things difficult by not complying with his/her other requests.
Unfortunately not. If the Creditors call for it, it is illegal and a criminal offence for you to not go.
There is no appeals process either.
Your Creditors may be doubting what you’ve stated in the declaration of your financial situation or they want reassurance. It really could be any reason.
You might be informed. You can always ask.
It is to discuss your financial situation.
The official receiver may ask you to attend. It’s not necessary, though, so the meeting may be held without you.
Yes, but it is better to go and be compliant. If you refuse, it will only make you look difficult, which could cause the Creditors to take harsher legal means against you.
Apart from what has already been stated, you only need to let your official receiver know of any change of financial circumstances (better or worse) so that the appropriate measures can be taken.
Cancelling a bankruptcy before completion
Yes, this is know as annulment. If you are successful, it will be as if the bankruptcy never happened and no record of it will be kept.
Via an approved Court that would hear such appeals.
Some reasons may be because you have enough money to pay off your debt or you can secure the debt against a property you own.
You can also try and cancel the bankruptcy in the case your Creditors are making you bankrupt and you think this is wrong
You can’t get it cancelled just because you’ve changed your mind. Unless you have an alternative plan on how to deal with the debt.
Essentially, you have prove that you have enough money by giving the details of the debts and the expenses related to bankruptcy so far and also show proof of having paid these off. You send this to the court and also let your official receiver (or whoever is dealing with your bankruptcy) know 28 days in advance and give them a copy of your application. They will then confirm with the court that you have paid. You will also have to go to court.
There is a fee, which can be negotiated or even waivered.