April 26, 2019 8:17 am Written by

What Happens If I Go Bankrupt?

What Happens If I Go Bankrupt?

As with anything, knowledge is power, and knowing what to expect in any situation aids in preventing fear of the unknown.

If you know what to expect and what will happen, you can be more at ease and relaxed in a situation, and bankruptcy is no different.

Many people struggling with their bills and debts think about going bankrupt, some for years they contemplate bankruptcy, but do not follow through as they do not know what to expect; what will happen if they go bankrupt?

This is just an overview of bankruptcy and the procedure and what happens when you go bankrupt. As with any kind of financial or debt advice, it is always best to speak to a professional before entering into bankruptcy, as it is not an option for everyone, and there are different implications for different people depending on their full set of circumstances.

Bankruptcy 101

Bankruptcy is a form of insolvency, if you are insolvent you can go bankrupt.

As to the criteria required to go bankrupt:

* You owe £20,000 or more in debt

* You are 18 years or older

* You are a resident in the UK, and the centre or majority of your interests are in the UK

Pretty straightforward.

If you have debts of less than £20,000, and no assets, and no surplus income, then you may wish to consider a DRO or Debt Relief Order, which is similar to bankruptcy, but for less debt.

Once you have made the decision to go bankrupt, there are two (2) things you need to be aware of and do, one is the fees to go bankrupt, nothing is free, even insolvency, and also the forms.

Bankruptcy Fees: Currently the fees to go bankrupt in England and Wales are £680, which is an application fee of £130, and a deposit of £550. The fees are slightly different in Northern Ireland and also in Scotland, which bankruptcy is sequestration.

You can apply to go bankrupt online, and pay the fees in instalments, however, until the full fee is paid, your bankruptcy is not filed.

For those on low wages or receiving certain benefits, they can apply for a reduction in the fees through the court, or possibly qualify for a grant.

The Forms: There are two (2) forms to complete to file your bankruptcy, form 6.27, the petition form, and form 6.28, the statement of affairs form.

Form 6.27 asks the following:

  • Your name, place of residence and occupation
  • The name of any business you run and whether you run that business alone or with


  • The nature and address of your business
  • If you no longer run a business but you did during the period that you built up your

debts then you will have to disclose that business also.

  • The address or addresses that you resided at or carried on during that period.
  • A statement that you are unable to pay your debts
  • A request that the bankruptcy order be made
  • Particulars of any insolvency proceedings that have taken place in the last five years.
  • If an IVA is in force then the name and address of your supervisor

Form 6.28 the statement of affairs, asks the following:

  • Name and address of your secured creditors with amounts owed, value of assets,

nature of security, etc

  • Name and address of your unsecured creditors
  • Details of your assets, including joint assets
  • Income and expenditure
  • Details of any dependants
  • Details of any attempts to come to an agreement with your creditor’s and whether an

IVA is likely to be acceptable.

  • details of any assets transferred away recently (such as property, or cars, etc)

What Happens After I File For Bankruptcy?

Once submitted your bankruptcy forms are reviewed by a Judge, and you will be declared bankrupt. This means your creditors can no longer have contact with you, and you are under the court’s protection.

An Official Receiver will be appointed to review your forms, and contact you to discuss your case, and also interview you if they have any questions.

The OR’s main job is to see if you have any assets, such as property, that can be liquidated to pay back to your creditors.

The OR also will see if you have any surplus income after your allowed living expenses, to pay into the bankruptcy. Should you have any surplus income the OR may have you pay into the bankruptcy for a period of three (3) years. This is under an Income Payment Order or Arrangement, IPO, IPA.

You are bankrupt for a period of 12 months, then the bankruptcy is discharged, it is over, and you no longer owe the accounts or debts you had.

If you were required to pay into the bankruptcy, you will still have a further 24 months to make payments (unless your circumstances change), but your bankruptcy has been discharged after the 12 months.

In some instances, such as for fraud, the OR may issue a BRO or Bankruptcy Restriction Order.

This BRO keeps you under the restrictions of bankruptcy, even tough your bankruptcy may have been discharged after 12 months.

BRO’s can last for up to 15 years.

Why Would Someone NOT Want To Go Bankrupt?

It cannot be stressed enough to get professional advice prior to going bankrupt, as there are going to be times and for some people that bankruptcy may appear to be an option, but it is not a good one.

If someone owns property with equity and goes bankrupt, there is the possibility they could lose that property, or other asset.

If a person has sufficient surplus income that would be taken in a bankruptcy, they may wish to explore other options such as debt management, or an IVA/Individual Voluntary Arrangement.

So just an overview of bankruptcy and what is involved, to hopefully remove some of the fear of the unknown.

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