Bankruptcy FAQs
Q. Where can I get advice about bankruptcy?
A. You should get independent advice. You may consult a solicitor, a qualified accountant, an authorised insolvency practitioner or a reputable financial advisor. Please don't leave it too late or you may find that professional advisors cannot help you because matters have gone too far.
Q. How does bankruptcy affect my credit rating?
A. Your bankruptcy will be registered with credit reference agencies and remain on your file for a minimum of six years. After this time you may still have to declare your previous history, particularly when applying for a mortgage
Q. What are the alternatives to bankruptcy?
A. Please feel free to speak to one of Sterling Green's qualified advisors’ concerning your alternative options.
The alternatives to bankruptcy are:
Informal arrangement (such as a Debt Management Plan) - You could consider writing to all your creditors to see if you can reach a compromise.
Individual voluntary arrangement - This is a formal version of the previously described arrangement. You would need to apply to the court with the help of an authorised insolvency practitioner.
Administration orders - If one or more of your creditors has a court judgment against you and if your total debts are £5,000 or less, the county court could make an administration order. Under the administration order, you make regular payments to the court, which will then pay your creditors. You will have to pay a fee for an administration order, but this will be added to the money you already owe and not charged separately.
Q. Where is the bankruptcy order made?
A. Bankruptcy petitions are usually presented either at the High Court in London or a County Court near to where you live or trade.
If you want to make yourself bankrupt you should contact your local Court. They can give you the name, address and telephone number of the nearest County Court that deals with bankruptcy.
Q. How do I petition for my bankruptcy?
A. First, you will need to complete several forms. You can get the forms, from a local court that deals with bankruptcy. You can also complete the forms on-line or print the forms off at The Insolvency Service's website at: www.insolvency.gov.uk
Q. How much will it cost to make myself bankrupt?
A. There are three fees you may have to pay:
The Court fee of £120
In some circumstances the Court may waive this fee; for example, if you are on Income Support.
The deposit of £250 towards the costs of administering your bankruptcy.
The fee to swear the statement of affairs.
In a County Court, no charge is made to swear the affidavit, which is part of your statement of affairs. But in the High Court or before a solicitor there is a £7 charge.
Q. What will happen at Court?
A. The Court will either hear your petition straight away or arrange a time for the Court to consider it.
Q. At the hearing the Court can do one of four things:
- Stay (delay) the proceedings - often because the Court needs further information before it can decide whether to make a bankruptcy order.
- Dismiss the petition - perhaps because an administration order would be more appropriate.
- Appoint an Insolvency Practitioner - if the Court thinks that an Individual Voluntary Arrangement would be more appropriate. This will only be possible if your assets are more than £2,000; your unsecured debts are less than £20,000; and you have not been bankrupt or made an Individual Voluntary Arrangement in the previous five years. If you do not wish to enter into such an arrangement, you should inform the Court.
- Make a bankruptcy order. You will be bankrupt the moment the order is made by the Court.
The Official Receiver will then be your Trustee in bankruptcy (see below).
Q. What are the duties of a bankrupt?
A. When a bankruptcy order has been made, you must provide the Official Receiver with information relating to your financial affairs such as, a list of your assets (property, pensions, insurance policies etc), amounts of each debt and to which creditor they are owed to, within 21 days.
There are also additional restraints & points of responsibility, such as:
- Any assets and income increases obtained during the bankruptcy should be declared to the Trustee.
- You must not obtain credit of £250 or more from any person without first disclosing the fact that you are bankrupt.
- Any bank or building society accounts must no longer be used.
- You must not make any direct payments to your creditors.
- You may also have to attend Court to explain why you are in debt. If you do not co-operate, you could be arrested.
- Hold certain public offices
- Be involved directly or indirectly in promoting, forming or managing a company without the Court’s permission
A bankrupt may open a new bank or building society account but should disclose the fact that they are bankrupt.
Q. How long does Bankruptcy last?
A. A bankrupt may be discharged (freed from obligations under the bankruptcy order) after the one year.
Discharge is not necessarily automatic and can be postponed by the Court. In addition, the discharge may not necessarily free that person from certain all liabilities and does not mean that unrealised assets will be safeguarded.