Bankruptcy FAQ's
We have listed some of the most frequently asked questions regarding the main issues surrounding the Bankruptcy subject. If the question you want answered does not appear please do not hesitate to contact us and we will answer it for you.
Will I be forced to sell my endowment policy?
The answer to this question depends on whether the endowment policy has been assigned to a Building Society or Bank as security for a mortgage.
If the endowment policy is assigned to a Building Society or Bank as security for a mortgage, then it will not be possible for the 'Official Receiver' or 'Trustee in Bankruptcy' to sell it, as technically, the rights to the proceeds of the policy no longer belong to you.
It is worth bearing in mind that the downside to the above scenario is that the level of outstanding mortgage owed to the Building Society or Bank will reduce in line with the value of the endowment, therefore, there will be an increase in the value of the equity owned within the property.
If the endowment policy is not assigned to a Lender, then the 'Official Receiver' or 'Trustee in Bankruptcy' will be able to surrender or enforce the sale of the policy, and add the funds into the Bankrupt's Estate.
The course of action to be undertaken will be the at 'Official Receiver' sole discretion
Will I be forced to sell my home?
In cases where there is equity with a property, the 'Official Receiver' or 'Trustee in Bankruptcy' will consider the option of selling the property and freeing the equity from within it. The released equity will then become part of the Bankruptcy Estate.
This applies whether the property is solely or jointly owned. However, if the property is jointly owned and the joint owner is not party to the debts then they will be given the opportunity to purchase the debtor's share of any equity in the property.
Which of my creditors will get priority in my Bankruptcy?
The 'Official Receiver' or 'Trustee in Bankruptcy' will prioritise the creditors to be paid from the realisation of the Bankrupt's assets in the following manner:
- Official Receiver's and/or Insolvency Practitioner's Fees in respect to the Bankruptcy
- Costs in respect of the realisation of assets, (i.e. Estate Agency fees)
- Any claim from the Redundancy Payments Office, in respect of employees wages.
- All other unsecured creditors.
What debts will not be written off by my Bankruptcy?
Debts that will not be written off by a Bankruptcy are referred to as 'Non Provable in Bankruptcy'.
Non Provable debts can still be pursued by the creditor despite a Bankruptcy Order having been made.
Examples of Non Provable Debts are:
- Court fines such as maintenance orders, Child Support Agency payments and any other fines made through family courts.
- Any debts included in the bankruptcy which were connected with fraud.
- Student Loans.
- Any debts connected with or arising from personal injury claims.
- State benefit overpayments.
- Secured Creditors.