This article from Bankruptcy Clinic explains what happens after a Bankruptcy Order has been made against you by the court. You’ve already have completed a Bankruptcy Petition and Statement of Affairs, sworn an affidavit and, in most cases, attended your court hearing. So what happens next?
The Official Receiver
From the moment your Bankruptcy Order is made, all your bank and building society accounts will usually be frozen straightaway so you can’t withdraw any money. These accounts, along with the rest of your estate, such as property and other assets, will pass into the control of the Official Receiver.
The Official Receiver will contact you in due course to request an interview, which will take place either in person or on the phone. You’ll need to complete a questionnaire about your finances, listing your income, outgoings and debts. Much of the information will be the same as you provided in your Statement of Affairs, so you may like to take it along, or have it handy, when the interview takes place.
When the Official Receiver has an accurate and up to date picture of your financial circumstances, they’ll send a report to each of the creditors you’ve listed in the questionnaire and tell them about your bankruptcy. As soon as they’ve received this information, your creditors are legally obliged to stop pursuing most forms of debt recovery action against you – so you’ll have instant protection from them.
Next, the Official Receiver will decide what to do with your assets, such as property and any luxury items you own. If you’ve asked Bankruptcy Clinic to help you with declaring bankruptcy, we’ll already have discussed with you which of your assets are likely to be sold. So there shouldn’t be too many surprises from this part of the process.
If you’re a homeowner, it’s possible that you’ll be required to sell the property for the benefit of your creditors. This isn’t always the case, for example, if dependent children still live with you. However, you may still be required to release funds from the property in other ways, such as arranging for your partner, a relative or friend to buy your interest in the house or flat.
If you have an expensive car, you may be asked to trade this in for a cheaper model, but if you need a car for personal and/or work reasons, you shouldn’t be expected to do without one altogether. Similarly, you’ll be allowed to keep essential living items such as furniture and household appliances.
When your assets are sold, the Official Receiver will deduct the costs of dealing with your bankruptcy first before passing any money on to your creditors.
If you have little or no disposable income, you probably won’t need to make any payments to your creditors during your bankruptcy.
However, if the Official Receiver considers you can afford it, you may be asked to make regular payments to your creditors for up to three years, though an Income Payments Agreement (IPA) or Income Payments Order (IPO). Even if this happens, you’ll always be left with enough money to meet your essential living expenses.
Bankruptcy brings with it a number of restrictions and limitations on your personal life. These include:
- Not obtaining further credit without the Official Receiver’s permission
- Being unable to hold certain public offices and certain job titles
- Not being allowed to run a business
- Possible effects on your immigration status if you’re not a UK citizen.
You’ll need to comply with all relevant restrictions and limitations during your bankruptcy term, which usually lasts for 12 months. In extreme circumstances, the court will impose a Bankruptcy Restrictions Order (BRO), which lasts for up to 15 years, but this is rare.
Discharge from bankruptcy
In most cases, your bankruptcy will be discharged after 12 months and all unsecured debts listed within it will be written off. This means you could be able to walk away from your debts and make a fresh financial start just a year after your Bankruptcy Order is made.
Could bankruptcy be right for you?
There are lots of things to consider before deciding on bankruptcy as the best way to deal with your debts. The expert advisers at Bankruptcy Clinic will talk through your individual circumstances and help you find the right answer to your debt problems.
Whether or not that’s bankruptcy, you’ll be taking the first step to regaining control of your finances and getting on with your life.
Contact Bankruptcy Clinic today
- Call free on 0808 168 7389, or 01625 462 770 from a mobile.
- Complete our quick online enquiry form and we’ll get back to you.
We’re ready and waiting to help, so get in touch today.