Personal bankruptcy
Personal bankruptcy is the last resort for individuals unable to resolve their financial problems. Let Access Debt Solutions help you explore all the possible alternative solutions to personal bankruptcy.
In general terms personal bankruptcy can occur if:
- You petition for your own bankruptcy
- You are the subject of a bankruptcy petition brought against you by a creditor for debt of £750.00 or more
- The supervisor of an Individual Voluntary Arrangement makes an application for bankruptcy proceedings
If you wish to avoid personal bankruptcy by setting up an Individual Voluntary Arrangement (IVA) then an Interim Order will be required.
If the matter proceeds to Court you must attend in person. At the hearing, the Judge has to make a Bankruptcy Order unless:
- You have paid the debt off and have proof
- You have given the creditor security to cover the debt
- You can prove the debt is not due
- The creditor has unreasonably refused an offer to secure the debt
Unlike County Court Judgments, the Court will not allow you to pay the debt off by monthly instalments to avoid bankruptcy. However, the Judge may adjourn the hearing to allow you a short time to raise capital to pay off the debt in full or to look at the possibility of an Individual Voluntary Arrangement.
With Personal bankruptcy, the main points to note are:
- If you have any assets, such as a share in the equity of the family home, a trustee in bankruptcy will be appointed who may sell these assets for the benefit of your creditors
- Normally the sale of a jointly owned home is delayed for 12 months and a co-owner is given the opportunity to raise finance to buy out your share of the equity. If there is negative equity in your home, the co-owner may be able to buy out your interest in the property for a nominal amount. With negative equity cases, it is unlikely that the property will be sold however a charge may be placed on the property which means that if it is sold in the future, any equity goes towards the bankruptcy even if this happens years after you are discharged as a bankrupt.
- You may be able to keep a car if you can show you need it for work, or it is not worth much.
- Any goods you have on hire purchase will probably have to be returned to the hirer.
- It is a criminal offence to obtain credit in excess of £250 without telling the lender you are an undischarged bankrupt.
- You cannot be a director of a limited company, hold public office or continue in certain professions such as solicitor or accountant.
- You are likely to be able to hold only a basic bank account.
The court may make an order for you to make payments out of your income, if it considers you have the means to do so.
Access Debt Solutions provides free advice on personal bankruptcy. Take a look at the option of an Individual Voluntary Arrangement (IVA) or call us now on 0114 244 6200.
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