Bankruptcy in brief

Bankruptcies are held in the County Court. Any person owing more than £750 can be declared bankrupt. If you are declared bankrupt the court will issue a bankruptcy order and the Official Receiver will interview you. If you have any assets they can be sold to pay any court costs and settle your outstanding debt.

The Official Receiver will look at your current financial status and make a decision as to whether you can afford to make monthly payments to your creditors. These payments will continue for up to three years from the start of your bankruptcy. If you refuse to pay you can be forced to do so through a court process known as an Attachment of Earnings Order.

Any asset can be considered for sale in a bankruptcy. In reality the most common asset for people entering into bankruptcy will be a property. Other assets such as time-shares, cars, stocks and shares, investments, caravans, overseas property or any other luxury goods can also be considered.

Certain goods can be kept, so a modest car, any tools of the trade needed for continued employment, household contents e.g. TV, stereo, computer, settee, washing machine etc. or other non-luxury goods would not normally be at risk.

Secured debts, Council Tax arrears, fines, CSA payments and Student Loan Company debts are not cleared in a bankruptcy. The court recognizes that these are priority debts and will make allowances for their payment.

If you are made bankrupt you can still work, but certain professions may be barred to people who are declared bankrupt. Whilst bankrupt you cannot be a director of a limited company. If you are a sole trader you can continue to trade, but you cannot have credit agreements with suppliers in excess of £500, which should be cleared each month.

It is normal to be discharged from bankruptcy after 12 months at which time you are issued with a “discharged from bankruptcy” certificate. Your name will be entered on a register at the Insolvency Service for 6 years after which time you can ask to have it removed.