Bankruptcy is a form of insolvency that writes off debts if you can’t afford to repay them, giving you a fresh start. It’s a legal process that’s suitable if you can’t repay your debts in a reasonable amount of time.
Either you will make a petition to the court, or someone else will petition to make you bankrupt. If someone else has asked for you to be made bankrupt, you’ll be made aware of it by the court. If you don’t want to be made bankrupt you’ll need to prove that you don’t owe the person applying for money, or you’ll need to pay back any money you do owe them.
The first stages of the bankruptcy process are usually managed by an official receiver, who works for the Insolvency Service. They are normally your trustee unless an insolvency practitioner takes on that role. Your trustee explains the bankruptcy process to you and sells any goods or assets that you own which are not everyday household items or things needed to do your job.
What steps do I take if my Bankruptcy is approved?
If your bankruptcy is approved, you’ll have an interview with the official receiver, either by telephone or in-person. You must attend this interview and co-operate with the official receiver for the bankruptcy to run as smoothly as possible. If you don’t, the bankruptcy may go on longer than the usual twelve months or you may have to attend court.
It helps to be prepared with the information the official receiver needs. You’ll need to tell them everything about your finances, including all debts, bank accounts, assets, and changes in income.
You will need whatever paperwork you have to prove what you’re telling them; the receiver will tell you exactly what paperwork you’ll need before the interview. You should also tell them if you need special help, if there’s anything that needs to be sorted out urgently, or you need more time to find paperwork for the meeting.
What happens to your assets in Bankruptcy?
You can keep any items you need for your job, anything belonging to or exclusively used by a child (within reason), and everyday household items like furniture and clothing. If your household items are valuable they can be sold, but they will be replaced with a cheaper equivalent.