How and when Bankruptcy ends

When it comes to the end of the bankruptcy you have to make a distinction between two types of bankruptcy endings formal and practical. The first occurs after the period of 12 months starting with the very date when the court confirmed that you are bankrupt. However, in certain cases this initial period of 12 months can be even longer. These cases refer to the situations where you did not oblige your actions with the bankruptcy requirements and limitations. Additionally, refusal to closely cooperate with the trustee can also lead to the prolongation of this period.

The second ending scenario for your bankruptcy situation is certainly more desirable. It marks the better days for your financial situation. Therefore, this case is strictly individual. Some people will be able to function in terms of their solvency sooner while others will be able to reach this level later. In both cases, we are referring to the new situation where the bankruptcy and its consequences are successfully resolved. Nevertheless, it is worth mentioning that very often for psychological reasons this period of full consolidation can be a little bit longer despite the clear financial indicators which are positive. Eventually, we can understand why certain person still feels uncomfortable and not secure even long after the bankruptcy itself is officially closed.

Bankruptcy Discharge

As already mentioned, the bankruptcy related restrictions and obligations usually end after the period of 12 months from the moment when the bankruptcy is determined. In that case, the discharge from bankruptcy is to occur automatically. This includes situation that the payments are not being made to the creditors. On your personal request you can receive the discharge certificate, although the discharge itself is valid without it. We have to emphasize that discharge can occur automatically in two cases. The first one include the situation of discharge suspension. This means that you did not oblige to requirements or you did not cooperate with the Official Receiver or trustee. In the second case, the discharge of bankruptcy may be suspended during the time of investigation about the possible bankruptcy with criminal elements.

Importance of Bankruptcy Discharge

The importance of a bankruptcy discharge is immense. In the first place, it marks your return to the regular financial functioning. This includes the possibility for you to apply for a credit without an obligation to mention that previously you were bankrupt. In addition, you will be freed from the most of the debts, with the exception of the following categories:
• The debts related to the family court proceedings (for example maintenance)
• The debts related to the personal injury claims against you
• The debts related to the fines or other expenses directly provoked by the frauds or similar criminal activities according to the valid court’s decision
• The debts which are incurred after the issuance of the bankruptcy order
• The debts related to the student loans

Mortgage, Assets and Business Issues

When it comes to the influence that discharge has on the mortgage issues, we have to emphasize its limitations. In case that creditors had secured their loan with a mortgage, then the bankruptcy discharge cannot automatically terminate your obligation toward them. On the other side, all of the assets claimed by the Official Receiver or your trustee during the bankruptcy duration will remain under their control even after the discharge is fully effective. Finally, after the discharge occurs you are free to be involved in the following business activities without the previous restrictions including positions of a director of the limited company and other management positions.

Cancelation of Bankruptcy

Besides the discharge itself there is one more way for bankruptcy to end. Through the annulment of bankruptcy the court actually terminates its own bankruptcy order. This can happen in the following cases:
• It is determined that your bankruptcy order should not have been issued in the first place
• You paid all of your debts and bankruptcy expenses during the period of bankruptcy
• You proposed to your creditors proposal for settlement under a voluntary agreement and they accepted it

In conclusion, we have to say that any possible conclusions about the strategy to wait for 12 months period to expire are more than inappropriate. This “financial time-out” which bankruptcy represents is to be used wisely and to its full potential. Through adequate restructuring of your financial situation and potentials your chances for the complete recovery are to be improved. It would be an ideal situation for you to provoke the annulment of bankruptcy with your payments. If you are not in the position to do so for various reasons, achieving the financial sustainability in the moment of bankruptcy discharge will be more than appropriate.

Andy Gorton is the author and editor of the Bankruptcy Clinic

Andy Gorton – who has written posts on Bankruptcy Clinic Blog.

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