Bankruptcy is arguably a rather odd situation in that it is, in principle, public knowledge. In practice, however, it’s highly unlikely that anyone you know personally will find out unless you choose to tell them. Your existing creditors, however, will have to be told and, going forward, some service providers will either be told or find out indirectly since bankruptcy lowers your credit rating.
Bankruptcies are listed in the London Gazette and the Insolvency Register
Even though both the London Gazette and the Insolvency Register have online editions, neither are exactly standard reading for the average person. They can also be challenging to navigate, whether you think this is a blessing in disguise or an issue which needs to be addressed is up to you. One issue which might be a concern is that both of these publications list a person’s home address. If you believe that this could expose you to risk of violence, then you can apply for a Persons at Risk of Violence (PARV) order.
Professional bodies may be told
Basically, if your bankruptcy could have an impact on your professional standing, then your professional body will be told.
Your creditors will be told
This is fairly obvious, in fact, you could argue that it’s essentially the whole point of bankruptcy. You must, however, be aware that some of your creditors may have a fairly major impact on your life and hence you need to be prepared for what bankruptcy will bring.
If you have an overdraft, then your bank will be one of your creditors. If you declare bankruptcy, then it’s highly likely that your account will be frozen. It may be cancelled completely.
If you have an overdraft facility but are not actually overdrawn, then you could try simply contacting your bank and asking them to cancel your overdraft option. That will remove what is effectively a line of credit and may make it possible for you to keep your existing account. It might be wise to check this before you go bankrupt.
If you have an overdraft facility and are overdrawn then your best move is usually to open a “basic” bank account (i.e. one with no overdraft facility) and get any income paid into that before you go bankrupt. In short, do everything you can to avoid being without access to a bank account and electronic payments, even for a short time.
Your utility providers
The good news is that your suppliers will have to wipe off any debts you owe them. The bad news is that going forward you will not only be treated as a new customer but a new customer with a bankruptcy on your credit record. This means that you may be asked for security (in the form of a deposit or a guarantor), or put on to a prepayment tariff, which is likely to be more expensive.
Your local authority
Council tax arrears are usually wiped out during bankruptcy unless your local authority has already obtained a council tax liability order. In that scenario, your local authority can try to seize goods but not income.
If you have a standard tenancy (assured, protected or secure), then your landlord will usually only be told if you are in arrears. At that point, they will be unable to pursue you for those arrears, however, they may be able to evict you for non-payment. If you need to find a new home then any prospective landlord will effectively be told, due to the impact on your credit rating.
Service providers will probably find out through your credit rating
Remember that your credit rating is now routinely checked by any organization which offers pay-in-arrears contracts such as mobile phone companies. Consider whether there is any action you should take before going bankrupt.
Please take professional advice before considering action. Contact us to find out more.