If after considering all of the alternatives you decided that you still have no realistic chance of clearing your debt, you can petition for your own bankruptcy at your local county court. The cost for a personal bankruptcy petition is £460 which includes £150 court fees + £310 Official Receivers fees, However, people on means tested benefits may be exempt from or pay a reduced Court Fee (ask court for details). For an additional fee The Insolvency Support Service can help you fill in your bankruptcy petition. Click here to get help with paperwork.
 
The main disadvantages of bankruptcy include stigma, possible job loss, liquidated assets including your property, loss of office and a chronic credit record. However, bankruptcy may still be a realistic solution if these disadvantages are acceptable or of no consequence. Normally people would only voluntarily declare themselves bankrupt if they had few or no assets to protect, therefore reducing the impact it had on them. There are certain assets that are excluded from bankruptcy such as personal possessions, household furniture, clothing, tools of the trade and certain pension entitlements.
 
However, if you do have assets that are not excluded such as equity in your property then these assets will need to be realised and paid into your bankruptcy estate. This can be achieved either by the introduction of third party funds or through the sale of your property. If there are assets that need to be sold then this is handled by an Insolvency Practitioner who in the case of a bankruptcy is appointed as the trustee in bankruptcy. In effect any assets of the debtor that need to be realised become the trustees responsibility to sell. Also, any assets you acquire during your bankruptcy will become the property of the trustee.
 
One positive step is that the family home will not be at risk for so long. Previously creditors could wait for any number of years before demanding equity to be released from a property but this has been capped at three years under the new act. This is a double edged sword in that action can be expected from the Trustee sooner, rather than later.
 
Depending on your earnings, your trustee may require you to make contributions to your creditors out of your income. The amount that is paid to creditors is determined by the amount that the debtor can reasonably afford after their normal cost of living expenses have been deducted from their income. This is called an income payments order (IPO) and it will remain in force for 3 years from the date of bankruptcy.
 
This means that even though you have been discharged from your bankruptcy after 1 year you will still have to continue paying your IPO for a further 2 years.
 
It is unusual for a creditor to petition for a debtors bankruptcy if there is little chance of retrieving any of their capital. However, in some cases this can happen. For example: if a creditor ran out of patience with a debtors promises to pay or they operate a strict bankruptcy policy. Creditors would much prefer an alternative that a least gave them a chance of a percentage recovery.
 
Under the new legislation your discharge from bankruptcy will take effect 12 months (or even sooner if the Official Receiver decides not to investigate further) from the date of your bankruptcy. Although discharge times have been reduced there is a sting in the tale...for the first time, your conduct immediately before going bankrupt could go against you. If you are found to have been dishonest or reckless, the Official Receiver can impose a Bankruptcy Restriction Order, which could extend the restrictions imposed by your bankruptcy to between 2 and 15 years. Misconduct prior to 1 April 2004 will, however, not be taken into account. Any Bankruptcy Restriction Order will be registered.
 
There used to be separate discharge times that applied to people who were in a second bankruptcy but this is now irrelevant, unless this is your second bankruptcy in 15 years.
 
Even after your discharge it will be difficult to get credit. The court records will show your bankruptcy for 6 years before becoming out of statute. However, credit reference agencies may well keep it on record for a lot longer even though it should be removed from their records at the same time. All lenders check these records when they are considering an application for a loan or mortgage.
 
If you have been unfortunate enough to have had a bankruptcy petition filed against then you should seek professional advice as soon as possible. Or if you have been made bankrupt recently all may not be lost as you may still be able to have the bankruptcy annulled in favour of an Individual Voluntary Arrangement.

A creditor's petition may only be presented if:
 
(a)      the petition is in respect of a debt, or debts, owed by the debtor to the creditors),
 
(b)      at the time it is presented:
 
     (i) the amount of the debt, or the aggregate amount of the debt, is at least the bankruptcy level (£750);
 
     (ii) the debt, or each of the debts, is for a liquidated sum payable to the creditor(s) either immediately or at some certain future time, and is unsecured (this condition may be waived in certain circumstances);
 
     (iii) the debt, or each of the debts, is a debt which the debtor appears either to be unable to pay or to have no reasonable prospect of being able to pay; and
 
     (iv) there is no outstanding application by the debtor to set aside a statutory demand served by the creditor in respect of the debt or any of the debts.
 
A debtor is deemed to be unable to pay a debt only if the debt is payable immediately and either:
 
(a)  the creditor to whom the debt is owed has served on the debtor a demand in the prescribed form requiring him to pay the debt or to secure or compound for it to the satisfaction of the creditor
-
     
at least three weeks have elapsed since the demand was served
-
     
and the demand has not been complied with or set aside;
 
OR
 
 
(b)  A judgment or court order in favour of the creditor(s), in respect of the debt, has not been complied with.
 
A debtor is deemed to have no reasonable prospect of being able to pay a debt only if the debt is not immediately payable and
     
the creditor has served on the debtor a demand in the prescribed form requiring him to establish to the satisfaction of the creditor that there is a reasonable prospect that the debtor will be able to pay the debt when it falls due
 
- at least three weeks have elapsed since the demand was served
 
- and the demand has not been complied with or set aside.
 
A petition may be presented before the end of the three week time limits mentioned above if there is a serious possibility that the value of the debtor's property will be significantly diminished during that period and the petition contains a statement to that effect. However, the court will not make an order until the time limit has expired.
 
Creditor's Petition - Procedure
 
The court will not make a bankruptcy order on a creditor's petition unless it is satisfied that the debt, or one of the debts, on which the petition was presented was either:
 
(a) a debt, payable at the date of the petition or which has since become payable, which has not been paid, secured or compounded for; or
 
(b) a debt which the debtor has no reasonable prospect of being able to pay when it falls due.
 
The court may dismiss the petition if it is satisfied the debtor is able to pay all his debts (taking into account both his contingent and prospective liabilities) or is satisfied
 
(a) that the debtor has made an offer to secure or compound for a debt in respect of which the petition is presented;
 
(b) that the acceptance of the offer would have required the dismissal of the petition; and
 
(c) that the offer has been unreasonably refused.  

The bankruptcy of a debtor starts on the day the bankruptcy order is made and continues until his discharge from bankruptcy which will be as follows:
(a)
     by court order in the case of a person subject to a criminal bankruptcy order or who had been an undischarged bankrupt within the previous 15 years
(b)
     
 
after 1 year or less if considered appropriate by the Official Receiver.
There is a mechanism to enable creditors and\or any Trustee appointed to
object to the early discharge.
(c)
     The Restrictions (or some of them) imposed by Bankruptcy can be enforced up to a maximum of 15 years in other cases.
 
Where the court is satisfied that an undischarged bankrupt has not complied with his obligations, it may order that the one year bankruptcy period continues to run for a period until certain conditions are fulfilled i.e the non-cooperation has been rectified, or
for a further specified period
 
The court has power to annul a bankruptcy order if it appears to it that the order should not have been made, or that the bankruptcy debts and expenses have all been either paid or secured for to the satisfaction of the court.

On bankruptcy, the bankrupt's estate vests in the trustee in bankruptcy. The trustee in bankruptcy gets in, realises and distributes the bankrupt's estate to creditors. The trustee will take control of all books, papers and other records which relate to the bankrupt's affairs.
 
The bankrupt's estate will be made available for the benefit of his creditors in his bankruptcy. It comprises all property belonging to or vested in the bankrupt at the commencement of the bankruptcy. The following items are not included:
(a)
     
tools, books, vehicles and other items of equipment necessary to the bankrupt for use personally by him in his employment or business;
(b)
     
 
clothes, bedding, furniture, household equipment and provisions necessary to satisfy the basic domestic needs of the bankrupt and his family;
(c)
     
property held by the bankrupt on trust for another person.
 
Any disposition of property (or payment in cash) made by the bankrupt during the period from the presentation of the bankruptcy petition to the vesting of his property in the trustee, will be void. The recipient may be required to return the property or cash.
 
In addition to the normal asset realisations undertaken by the Trustee, he has a wide range of powers to investigate events which took place prior to the Bankruptcy. For example the overturning of preferences, transactions at an undervalue (or gifts) form part of the Bankruptcy Estate. Whilst (for those made Bankrupt after 2001) Personal Pension Plans are exempt from the Bankruptcy, if excessive pension contributions were made into the plan prior to the Bankruptcy these can be recovered.

Had our OR interview today .....
 
For anyone about to have their OR interview (before I forget) the line of questioning went as follows:-  
 
1.  Confirm you've received the leaflet sent to you.  
2.  Explain in own words why you think you've gone BR.  
3.  Went through every credit card/loan/bank account asking:-  
 
  (a) When was this taken out  
  (b) What was money used for (general living, house etc - indepth answers not necessary)  
  (c) When was last time you used card  
  (d) When did you last pay them  
  (e) Did you withdraw any cash on cards  
  (f) Did you make any large purchases on cards  
  (g) For loan, what was purpose of loan  
  (h) When loan taken out, were you in f/time employ  
 
4.  Explained no need to contact LL as we're not in arrears (totally understood why we were worried)   - could have kissed her at that stage!  
 
5.  Explained obligation of IPA -  
 
    I got IPA for £300/month (I was expecting £500)  
    Wife got IPA for £75/month (was expecting £150)  
 
    Nothing on SOA questioned.  
 
6.  Explained re NT Tax Code and how it works  
 
   Said that because of huge backlog, if the tax code didn't arrive in time for this tax year, this wasn't our faults.  
 
7.  Would now go away and write her report and draw up agreement for IPA. Once she's received it back, 14 day delay in case circumstances change and then her line manager signs it off.  We'd then be contacted to advise where to pay this and agree a date to start.  
 
8.  Explained automatic discharge after 12 months - could very possibly be sooner if we co-operate.  
 
9.  Gave us her e-mail address and direct line in case we thought of any other questions.  Other than that, wait now until we hear in writing and if any creditors hassle us - tell her and she'll deal with. Any demanding letters send to her or bin.  
 
 
HTH anyone...

Letter to former lenders post bankruptcy...
 
Thanks to TalbotWoods for this information....
 
 
Your Address  
Goes Here  
 
 
Data Control Officer  
This Creditor  
Data Controller Address  
 
 
Dear Sirs  
 
Re: Account Number xxxxxxxxxxx  
 
After consultation with both the Information Commissioner and the Credit Reference Agencies, I am writing directly to you to request that you formally update my credit files in accordance with the Data Protection Act.  
 
I was declared bankrupt on <Date of your bankruptcy>and subsequently discharged on <Date of Discharge>, and <name of creditor> was included within the Bankruptcy. For your convenience I have attached both my bankruptcy Order and Discharge Notification.  
 
Currently the information that you have recorded against my name with the Credit Reference Agencies is factually incorrect, and despite several written requests to your customer services , as yet your company has failed to correct the entries as required.  
 
• It is requested that if you intend to default the account, the default entry must be <Date if your bankruptcy>, in accordance with the Data Protection Act.  
 
• It is requested that you mark the account in some way as to indicate that it is settled or satisfied, in accordance with the Data Protection Act.  
 
• If you have sold the debt on, according to the Information Commissioner, you are still liable to ensure that both you and the new holder are aware and that as the originator of the information it is your responsibility to ensure that it is corrected.  
 
The Information Commissioner has indicated that I should allow you 28 calendar days from the date you receive this letter to comply, during this time you are requested either to update the Credit Reference Files correctly (of all three Credit Reference Agencies) or notify me in writing the reasons that you refuse to.  
 
After the 28 days have elapsed the Information Commissioner has requested that I inform them if your company fails to update the records so that they may take any necessary enforcement action against your company.  
 
I have copied the relevant information provided by the Information Commissioner as an attachment to this request.  
 
Yours faithfully  
 
 
 
Fred Bloggs  
 
Enc:  
 
Bankruptcy Order  
Discharge Notification  
 
 
 
 
 
Relevant Extracts from Bankruptcy - frequently asked questions – 18/06/07 issued by the ICO  
 
Frequently Asked Questions - Bankruptcy
 
I’ve noticed that an account that was included in my bankruptcy is marked in default later than my bankruptcy. Can I do anything to change it?  
 
Sometimes a lender will not know the exact date you were made bankrupt. This may mean that when the lender registers a default with the credit reference agencies, the date on the default is later than the date on your Bankruptcy Order.  
 
If a particular debt is included in the Statement of Affairs at the time of the bankruptcy, you can ask the lender to change the date of the default to the date on your Bankruptcy Order. To do this, you should write to the lender and ask them to change the default date to the date of the Bankruptcy Order.  
 
Remember to send the lender a copy of your Bankruptcy Order or other documentation which confirms the date you were declared bankrupt.  
 
If the lender refuses to change the date of the default then you can contact us using the enquiry form on our website (http://www.ico.gov.uk). You will need to send us:  
 
a copy of the Bankruptcy Order or document that confirms the date you were made bankrupt;  
proof that the debt in question was included in your bankruptcy;  
and a copy of the lender’s letter which says it won’t change the date of the default.  
 
What happens to the defaulted accounts on my credit reference file?  
 
After you have been discharged from your bankruptcy you can send proof of your discharge to all the lenders included on your Statement of Affairs.  
 
The lenders whose debts were included in your bankruptcy should then mark the entry on your credit reference file to show that you no longer owe money on that account (perhaps by marking the entry as 'partially satisfied’ or ‘partially settled’ or in some other way).  
 
Once the lender has changed the information on the entry, if you make any new credit applications the prospective lender will be able to see that you do not owe any more money on that account.  
 
Finally, if you wish, you can ask the credit reference agency to add a statement called a ‘Notice of Correction’ to the default entry. In your statement, you can explain that the entry was included in your bankruptcy which is now discharged.  
 
If the lender refuses to change the date of the default or mark it as ‘satisfied’ or ‘settled’ or to indicate in another way that you have fulfilled your obligations to that lender then you can write to us at: Information Commissioner, Wycliffe House, Water Lane, Wilmslow, Cheshire, SK9 5AF.  
 
*********************************************************  
 
 
To find the correct address to send it to, which MUST be the Data controller not customer services, enter the company details at the ICO site for Data Controllers  
 
http://www.esd.informationcommissioner. ... search.asp  
 
Or the phone the creditors customer services and ask for the details  
 
PLEASE NOTE  
 
Updated 22/02/2007 by Tim  
 
That the date that the CRF's should show as being settled or satisfied, should show any date between your bankruptcy date and your discharge date, but NO LATER than your discharge date. This is the new guidance that the ICO applies following several precedent determinations between them and the creditors.  
 
Updated 30/06/2007 by Tim  
 
New guidance has been issued by the ICO and I have incorporated this into the above information. The main changes are that they now publicly state that an account can be marked as 'partially settled or satisfied'. When writing to former lenders you MUST now quote the new guidance.  
 
 
----------------------------------------
 
 
Don't bother with the CRAs, as they will follow this procedure:  
 
- You contact them with a dispute  
 
- They pass the dispute to the creditor  
 
- If after 28 days the creditors hasn't replied they wil remove the entry until the creditor does reply, which could be 6 months later.  
 
- If the creditor replies that their information is correct then the entry stands  
 
They have been exempted from this under the DPA, so you will be flogging a dead horse, besides which you would have to do this to all three CRA so three times the work to eventually have to challenge the Creditors anyway!!
 
 
-------------------------------------------------------------------
 

More from TalbotWoods re Credit Files post BR....
 
 
CREDIT REFERENCE FILE CLEAN UP – POST BANKRUPTCY  
 
There seems to be a lot of questions around about what is a clean credit file and what is not, so in an attempt to clear up some of the confusion, here are some examples of what you should be looking for and what you can do if it is not like these:  
 
Let us assume for this that the date of bankruptcy was the 1st April 2006 and discharged on 22nd November 2006  
 
Key information that should be shown:  
 
Default date MUST be NO LATER than 1st April 2006 (date of the Bankruptcy)  
 
Settlement date (where shown) MUST be NO LATER than 22nd November 2006 (date of Discharge)  
 
Experian (or CreditExpert)
 
Before clean up  
 
Entry Number: C3  
Name and address: MR FRED R JONES  
10, LOWER ROAD, HIGHER TOWN, BANKRUPTCY CITY, DE3 TED  
Date of birth: 02 February 1957  
Company name: BARCLAYCARD  
Account type: Credit Card / Store Card  
Started: 22/01/2003  
Default Balance: £3,582  
Current Balance: £3,582  
Defaulted On: 15/08/2006  
File updated for period to: 12/11/2006  
Status History:  
(brackets indicate most recent status) [8]  
 
After Clean Up  
 
Entry Number: C9  
Name and address: MR FRED R JONES  
10, LOWER ROAD, HIGHER TOWN, BANKRUPTCY CITY, DE3 TED  
Date of birth: 02 February 1957  
Company name: BARCLAYCARD  
Account type: Credit Card / Store Card  
Started: 22/01/2003  
Default Balance: £3,582  
Current Balance: Satisfied  
Defaulted On: 01/04/2006  
File updated for period to: 12/11/2006  
Status History:  
(brackets indicate most recent status) [8]  
 
Or  
 
Entry Number: C9  
Name and address: MR FRED R JONES  
10, LOWER ROAD, HIGHER TOWN, BANKRUPTCY CITY, DE3 TED  
Date of birth: 02 February 1957  
Company name: BARCLAYCARD  
Account type: Credit Card / Store Card  
Special Instruction Indicator: Partial Settlement  
Special Instruction Start Date: 02/2007  
Started: 22/01/2003  
Default Balance: £3,582  
Current Balance: Satisfied  
Defaulted On: 01/04/2006  
File updated for period to: 12/11/2006  
Status History:  
(brackets indicate most recent status) [8]  
 
Now with Experian this will mean that the account will come off the system 6 years from the default date  
 
If the default date is LATER than your bankruptcy date, or the account is NOT marked as satisfied (including partial settlements) then is it INCORRECT and you will need to follow the advice in this tread:  
 
http://www.debtquestions.co.uk/debt_for ... php?t=9431  
 
Equifax
 
Before Clean Up  
 
Name: Mr Fed R Jones  
Date of Birth: 02/02/1957  
Company Name / Insight Account Number: Barclaycard Centre XXXX XXXX XXXX 1809  
Account Type: Credit Card  
Terms: 0 @ £ 0 (Monthly)  
Start Balance: £0  
Current Balance: £3,582  
Status: Defaulted  
Credit Limit: £0  
Date Updated: 08/05/2006  
Start Date: 22/01/2003  
Date Last Delinquent: 05/06  
Date Satisfied:  
Default Date: 08/05/2006  
Default/Delinquent Balance: £3,582  
Payment History: Lots of little numbers but the default one will be in May 2006.  
 
After Clean Up  
 
Name: Mr Fed R Jones  
Date of Birth: 02/02/1957  
Company Name / Insight Account Number: Barclaycard Centre XXXX XXXX XXXX 1809  
Account Type: Credit Card  
Terms: 0 @ £ 0 (Monthly)  
Start Balance: £0  
Current Balance: £0  
Status: Settled  
Credit Limit: £0  
Date Updated: 15/06/2007  
Start Date: 22/01/2003  
Date Last Delinquent: 05/06  
Date Satisfied: 22/11/2006  
Default Date: 01/04/2006  
Default/Delinquent Balance: £3,582  
Payment History: Lots of little numbers but the default ( a red D ) will be in March 2006 and the Settled ( a green S ) will be in November 2006.  
 
Sometimes but not always, the entry will be followed by:  
 
Customer Account Status
 
Status: PARTIAL SETTLEMENT
Explanation: Payment received as a full and final settlement although the payment would not fully clear the balance.  
 
Now with Equifax this will mean that the account will come off the system 6 years from the default date  
 
If the default date is LATER than your bankruptcy date, or the account is NOT marked as Settled (including partial settlements) then is it INCORRECT and you will need to follow the advice in this tread:  
 
http://www.debtquestions.co.uk/debt_for ... php?t=9431  
 
 
CallCredit  
 
This is the least used of the CRF,s and they sell their information to a lot of the pay for your credit file companies, such as Annual Credit Report, Check My File.com, etc.  
 
CallCredit is notoriously incorrect to say the least, so will form a separate section that will cover them and the main companies that they also sell to; so there will be several examples.  
 
At present I urge people correcting their files to concentrate on Equifax and Experian and I will do an update when I get certain information back from CallCredit and the companies they sell to.  
 
How Much Does It Cost Getting Them Updated  
 
Honest answer is very little:  
 
You need to obtain your reports, which can be done on line or by post, the cost of the statutory report is £2  
 
The cost of a recorded letter to each of your former creditors and/or debt buyers  
 
After 2 months you need to check them again to ensure that the former creditors / debt buyers have updated  
 
The cost of posting a complaint to the ICO if the former creditor doesn’t up date  
 
So basically not a lot and hell of a lot cheaper that the companies that charge for this will charge you.  
 
In my case I had 18 creditors so the total cost for me (using statutory reports) was £23.20, which was about 1/3 of the cost the nearest ‘Well do it for you’ company charged!!  
 
How Long Will It Take Getting Them Updated  
 
From the time you receive your CRFs’ and send your formal request for the creditors to update.  
 
Allow 28 days (plus about 14) for the files to update.  
 
If they have NOT been updated after 2 months then raise the complaint to the ICO  
 
The ICO is SNOWED UNDER so you need to allow them around 60 days.  
 
Total time about 3 months  
 
Why Should I Bother  
 
This is one that is asked periodically, well…..  
 
Once the accounts are marked as satisfied and the account is correctly closed with the creditor / debt buyer.  
 
They can’t sell it on to another debt buyer, so you won’t get hassled in the future, with DCA that won’t believe you have been bankrupt – There have been instances f this happening 4 – 5 years after bankruptcy where the files have not been cleaned  
 
Your CRFs will automatically clean after 6 years from default/settlement date, so you will have a squeaky clean file from then. – There have been MANY instances where former creditors only close the account off several years after your discharge, thus knackering your CRF’s for many many years. In effect creating a very bad CRF for a lot longer than 6 years and in the worst case I have heard off a full 11 years!!!!!  
 
Your accounts will be marked as settled in the meantime, which ADDS to your credit score  
 
You will be able to rebuild your life much quicker  
 
Peace of Mind!!!!  
 
OK – So Who Do I Get My Files From  
 
I STRONGLY urge you ONLY to get your files from the Credit Reference Agencies and NOT from the sub agencies. The sub agencies buy their files from CallCredit and the information is often even more incorrect and out of date. Plus they charge hell of a lot more!!