What will happen to my motor vehicle?
A motor vehicle is an asset that would normally form part of your bankruptcy estate unless the vehicle is used for your employment, business or vocation or is required to meet the basic domestic needs of your family and yourself. Expensive or luxury vehicles are not normally permitted to be kept by a bankrupt individual and may need to be sold and a replacement vehicle purchased. As a guideline, the Official Receiver would normally allow a bankrupt individual to keep a car worth £1,000 or less.
What will happen to my pension?
Pension schemes that are approved by HMRC do not form part of a bankrupt's estate, provided that the bankruptcy order was made on a petition presented to court on or after 29 May 2000.
What will happen to my bank account?
An individual's bank accounts are normally 'frozen' once a person becomes bankrupt. Any funds held in bank accounts at the date of bankruptcy will form part of the bankrupt estate. Certain banks may allow an individual to continue using their existing bank account, but others may close the account and it may be necessary to open a new account with another bank.
When will my bankruptcy end?
A bankrupt individual will normally be “discharged” from bankruptcy after 12 months from the date of the bankruptcy order. In certain circumstances, usually if a bankrupt person does not comply with requests from their trustee, an application may be made to court to suspend the individual’s discharge from bankruptcy.
Can my bankruptcy be cancelled?
Annulment is a procedure that will have the effect of cancelling your bankruptcy. You can apply to court for an annulment of your bankruptcy if (1) you can show that the bankruptcy order should never have been made, (2) you can show that all your debts and the costs of the bankruptcy have been paid or secured, or (3) you enter into an individual voluntary arrangement.
What will happen to my home?
A bankrupt individual’s home will normally form part of their bankruptcy estate. The trustee may sell the home in order to realise the bankrupt’s interest in the property. Alternatively, a third party may purchase the trustee’s interest in the property. A trustee will normally obtain a valuation of the property and a copy of the mortgage redemption statement from any secured creditors along with details of how many registered owners of the property there are. This will then determine the value of the trustee’s interest in the property and will need to be realised for the benefit of creditors.
How does someone become bankrupt?
A person is made bankrupt by order of the court. The court may make the bankruptcy order upon the presentation of either:
What are the benefits of bankruptcy?
Bankruptcy is a process that allows an individual to deal with debts that they cannot pay. Bankruptcy may be beneficial to certain individuals as it frees them from overwhelming debts and will allow a person to make a fresh start. Stress caused by mounting debts may be quite distressing for some people and bankruptcy may give individuals a sense of relief in the knowledge that they no longer have to worry about their debt problems.
A bankrupt individual would normally be entitled to keep the following assets:
Most other assets will form part of the bankruptcy estate and will vest in the trustee from the date of bankruptcy.
What debts are included in bankruptcy?
All unsecured debts of a bankrupt individual are included in the bankruptcy and are no longer required to be paid personally by the bankrupt, with the exclusion of the following types of debt:
A bankrupt individual is not required to make payments to creditors after the date of bankruptcy.
What are the restrictions on a bankrupt?
The following are examples of some of the restrictions placed on an undischarged bankrupt:
Can a bankrupt be a director of a company?
Pursuant to Section 11 of the Company Directors Disqualification Act 1986 it is an offence for a person who is an undischarged bankrupt to act as director of, or directly or indirectly to take part in or be concerned in the promotion, formation or management of, a company, except with the leave of the court.
Are there alternatives to bankruptcy?
There are several alternatives to bankruptcy. Further information regarding the alternatives can be found here.
If you want to discuss anything regarding your personal finances call us today on 0208 661 7878 or contact us online here.