BANKRUPTCY

What is Bankruptcy?
It is a common misunderstanding that Bankruptcy is only for companies and businesses. It is not. Bankruptcy is the way that an individual person can deal with personal debts, which they have no hope of repaying.

If you have debts which you just can not afford to repay, either through an IVA or an informal debt management programme, then Bankruptcy might be a sensible option for you.

Bankruptcy is normally seen as a last resort after all other options for repaying debt have been exhausted. If you are declared bankrupt, you will no longer have to repay your creditors yourself and the court will protect you from any further actions that your creditors threaten against you. However, where you can afford to make any payment towards your creditors, then you will be made to do so by the Court for up to 3 years.

Facts about Bankruptcy:
	- The responsibility for paying your debts is taken away from you by the Court.
	- You will normally be Bankrupt for 12 months.
	- You may have to make monthly payments towards your debt for 3 years.
	- After 3 years, any outstanding debt is written off.
	- The record of your bankruptcy remains on your credit file for 6 years.
	- You will have to give up your share of any equity in property you own.
	- You will be allowed to keep reasonable household goods.
	- You will be allowed to keep your car as you have a reasonable requirement for it and it is not unreasonably valuable.

What happens to my property and belongings?
You will normally be able to keep reasonable personal items and household goods such as furniture and electrical goods as long as their value is not greater than the cost of their reasonable replacement. However, you will be expected to sell valuable assets such as antiques and expensive vehicles.

As a bankrupt, your title to any house you own or are paying a mortgage on will be passed to the Court. As such, ownership of any equity that you have personally in the property will pass to the Court. The Court will want to realise such equity for the benefit of your creditors.

This means that either you will need a third party to make an offer to the Court to buy out your equity or the Court will force the sale of the property to release the equity. If your husband, wife or children are living with you, it may be possible to put off a sale until the end of the first year of your bankruptcy to give time for other housing arrangements to be made. Your spouse or any other interested party would be encouraged to take legal advice about the home as soon as possible.

What will Bankruptcy cost?
In order to declare your self bankrupt, you will need to pay Court Fees. These normally total a one off charge of £490. If you require additional advice and help to complete your application forms, you must also expect an additional charge for this service.

Is Bankruptcy right for me?
There has been a lot of publicity surrounding changes in the law regarding bankruptcy – the Enterprise Act introduced in April 2004. The question is whether or not bankruptcy is now an easier way of dealing with debt? Certainly, for some individuals, the new rules may be of benefit. However, it is arguable that for the majority of people, the law has not made bankruptcy any easier, and in some aspects, it has become more onerous.

Bankruptcy remains a serious matter! Before deciding to proceed with bankruptcy you should contact Thomas Charles & Co Ltd for further professional advice.