Bankruptcy is one of a number of options available to resolve a debt problem. It is an option that is available to both the person in debt and to the creditor.
Once you have been made bankrupt, you will no longer have to deal with your creditors. Instead an official appointed by the
Accountant in Bankruptcy
Will effectively take over control of your money and property, and deal with your creditors. Bankruptcy is processed through the courts and if you are considering bankruptcy as an option or are faced with a creditor who is intending to apply to have you made bankrupt you will need to take expert advice.
Remember, bankruptcy might not be your only option and it might not be the best one for you.
What are the advantages of going bankrupt?
There are considerable advantages in opting to go bankrupt. These include:
- The pressure of dealing with demands from your creditors is removed
- You can make a fresh start when the bankruptcy order is over which can be in as short a period as one year
- You are permitted to keep certain things, like household goods and a reasonable amount to live on
- The money you owe can usually be written off.
What are the disadvantages of going bankrupt?
- It will cost you around £200 to go bankrupt. There are no exemptions or reductions so the full amount needs to be paid. (possibly more, for example if you use a solicitor)
- You will not be able to apply for more credit whilst you are bankrupt
- If you are a home owner with equity in the property, your home may be sold to pay some of your debts (although you may be able to apply to your local authority for re-housing)
- Although you can keep household goods and a reasonable amount to live on, your car, and any items considered as luxury may be sold
- Some professions will not allow people who have been made bankrupt to continue working
- If you own a business this will probably be closed and the assets sold to help meet debts
- Immigration status can be affected
- Your bankruptcy will be published on the internet and your case could also be published in your local newspaper
- Even when bankruptcy is over further bankruptcy restrictions can be put in place if you did not co-operate with the Official Receiver, or took on debts in the knowledge that you could never expect to meet your commitments
- There are some debts including court fines and student loans that will never be written off.
- Although creditors have to stop most types of court action following a bankruptcy order, in some cases bailiffs may still be able to remove your possessions.
- How do I go bankrupt?
Bankruptcy is awarded either:
Following a debtor’s application to the Accountant in Bankruptcy.
Or
Following a petition to the sheriff court by a creditor.
When a debtor applies for their bankruptcy and the application form is correctly completed with the fee and all the information needed, bankruptcy will normally be awarded within five working days of the Accountant in Bankruptcy receiving it.
When a creditor or a trustee in a trust deed petitions the sheriff for bankruptcy, a debtor could be made bankrupt in less than a fortnight from the date their petition is presented. The debtor will receive a warrant citing them to appear at a court hearing to decide whether they should be made bankrupt.
If a debtor appears or are represented at the hearing and provide evidence, the sheriff may decide to postpone their decision if they are satisfied that the debtor will pay what they owe within 6 weeks or if they plan to repay their debts through the Debt Arrangement Scheme.
Both the award notice issued by the sheriff court and the certificate of award of bankruptcy issued by the Accountant in Bankruptcy will name the trustee appointed to administer the bankruptcy. Accountant in Bankruptcy website address is www.aib.gov.uk/
Accountant in Bankruptcy helpline: 0300 200 2600
Opening hours Monday to Friday 9am-4.30pm
Once you have sworn your forms, the court may either fix a time for the hearing, or hear your case straight away. If your case is in the county court, you will have to attend the hearing.
When does bankruptcy end?
If a debtor applies for their own bankruptcy, they will normally be discharged one year after the date the bankruptcy was awarded. If a creditor petitioned for the bankruptcy, discharge will be one year after the date that the court issued the warrant citing the debtor to appear at a hearing. However, if a debtor does not co-operate with the trustee, the trustee can ask the sheriff to delay the discharge by up to two years at a time.
The debtor will
not
be formally notified that the bankruptcy has been discharged. However they can, if they wish, ask the Accountant in Bankruptcy for a certificate of discharge. There will normally be a charge for this.
Even though a debtor has been discharged, the bankruptcy will not be finished until the trustee has done everything they need to, and they are discharged from their duties. The debtor must co-operate with the trustee until the trustee is discharged.
The debtor will be notified of the trustee’s application for discharge.
Further help
Accountant in Bankruptcy Enquiry line: 0300 200 2600 – Information about bankruptcy is available from the Accountant in Bankruptcy website. Information is also available in languages other than English.
Citizens Advice Scotland
Citizens Advice Scotland gives free, confidential, impartial and independent advice to help you solve problems. To find your nearest location, including those that give advice by e-mail, click on nearest CAS, or look under C in your phone book.
Payplan
Tel 0800 280 2816 or Mobile calls maybe cheaper on 0207 760 8980
– Comprehensive advice and support on debt problems
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