Bankruptcy is a formal court procedure.
You can either petition for your own Bankruptcy and the cost is currently £680. Alternatively, one of your creditors can petition for your Bankruptcy if they are owed £5,000 or more.
The Official Receiver will manage your Bankruptcy and will contact you to either; complete a questionnaire or arrange a meeting at their offices. They will then look into any assets that you own and investigate any unusual transactions.
Your assets are sold to help pay your creditors with exception of certain items (personal belongings, household furniture and tools of trade).
If you have a surplus income after paying your essential household and personal expenses, you will be asked to make payments for up to 3 years.
Bankruptcy usually lasts twelve months, during which time The Official Receiver or Trustee will realise assets to re-pay your creditors.
All debts will be written off with certain exceptions (student loans, fines, CSA).
Whilst bankrupt, you cannot:
- Act as a Director of a company without Court’s permission
- Borrow more than £500 without declaring to the lender that you are bankrupt
- Work as an Insolvency Practitioner