My-Debt: Bankruptcy FAQ’s
What is bankruptcy?
o Bankruptcy is one way of dealing with debts you cannot pay. The bankruptcy proceedings free you from
overwhelming debts so you can make a fresh start, subject to some restrictions; and make sure your
assets are spread out equally amongst all of your creditors. All creditors that you have must be
included. Anyone can go bankrupt, including individual members of a partnership. There are different
insolvency procedures for dealing with companies and for partnerships themselves.
What happens during the bankruptcy hearing?
o You will need to arrive at the court in plenty of time for the pre arranged appointment time, on arrival
at the court you will have to contact the bankruptcy clerk. They will take you to look through the papers
and will also require that you sign an oath to state that all of the information that has been provided is
true to your best knowledge and belief. Following this, the papers are sent to the judge where he will
look through these. The clerk will either send you away fro for a while or they will ask you to wait.
(Tthe amount of times in which you will be in the court vary from court to court). Following this the
judge makes the order and you are then bankrupt. You will either receive a copy of the bankruptcy
order or this will be sent to your home address.
What happens after the court hearing?
o Following the making of the bankruptcy order your estate will be transferred to the Official Receiver.
The Official Receiver should make contact with you within 48 hours of the order being made. In some
cases the Official Receiver will contact you at the court. They will make initial contact and ask questions
about any assets and bank accounts that you may have and also arrange an interview with you. In the
main the interview that the Official Receiver has with you will be over the telephone. However, in some
cases they may require to see you in person. The Official Receiver will give the notice of the bankruptcy
order to local authorities, utility suppliers, courts, sheriffs, bailiffs, National Savings and Investments
(premium bonds), the Land Registry and any relevant professional bodies. Enquiries will also be made
of banks; building societies; mortgage, pension and insurance companies; solicitors, landlords and any
other persons or organisations who may be able to provide details of any assets or liabilities that you
have, or have had, an interest in (either on your own or jointly with others). Third parties will also be
asked about any other matters relating to your bankruptcy.
What are my duties as a bankrupt?
o When a bankruptcy order has been made, you must comply with the Official Receiver’s request to
provide information about your financial affairs. The Official Receiver may request that you attend at
his or her office for an interview - the Court will give you the address of the Official Receiver. (Note:
usually before the interview, you will be sent or given a questionnaire which you should fill in as fully
and accurately as possible.) If the Official Receiver does not ask that you attend at the office for an
interview, you will be sent a letter which will set out what is required of you. Again, it is likely that you
will be asked to complete a questionnaire. Below is a snapshot of what your duties will include:
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1) Give the Official Receiver a full list of your assets and details of what you owe and to whom Formatted: Bullets and Numbering
2) Look after and then hand over your assets to the Official Receiver together with all your
books, records, bank statements, insurance policies and other papers relating to your property
and financial affairs.
3) Tell your trustee about assets and increases in income you obtain during your bankruptcy.
(Note: by law you must inform your trustee of any property which becomes yours during the
bankruptcy. Such property includes lump sum cash payments that you may receive, for
example redundancy payments, property or money left in a will).
My-Debt: Bankruptcy FAQ’s
4) Stop using your bank, building society, credit card and similar accounts straightaway.
5) Not obtain credit of £500 or more from any person without first disclosing the fact that you
6) Not make payments direct to your creditors.
What will happen to my home?
o If you own a home either solely or jointly the interest in the property mortgaged or otherwise will form
part of your bankruptcy estate. Your home may have to be sold to pay off part of your debt. The
Official Receiver will look into the value of the property and any loans secured on it. If the property is a
family home then the Official Receiver will allow the proceedings to be halted in the first year whilst
other housing arrangements are sought. If the property is jointly owned and your partner is solvent
then there is a possibility, if there is little or no equity in the home, that this can be purchased back.
How long does bankruptcy last?
o Under new bankruptcy laws introduced on 1st April 2004 the statutory period for a bankruptcy was
reduced from 3 years to 12 months. During the 12 months you are subject to the restrictions of the
bankruptcy. Also introduced in 2004 was the chance for early discharge, this is given when there is no
investigation needed further into your affairs and where you have co operated fully with the Official
Receiver. This is given at his discretion and therefore you could be discharged in 6-12 months.
Is my employer informed?
o In most cases your employer need not be informed; however certain jobs hold bankruptcy restrictions
and would advise that you obtain information from your contract or HR department as to whether a
bankruptcy will affect your employment.
What if I go to court and my bankruptcy is refused ?
o When you go to court, you are effectively declaring yourself legally and financially bankrupt. Providing
your paperwork (i.e. the Statement of Affairs/Debtor’s Petition) is in order and your circumstances fit
the criteria for bankruptcy, then a bankruptcy order will be granted. The Official Receiver will then deal
with your affairs and contact your creditors to inform them that your debt is written off.