What happens when you are bankrupt?
Once you have been made bankrupt all your assets come under the control of the Trustee, including your home. If you live with a partner and/or children then a period of twelve months may be allowed for other living arrangements to be made. At the end of the twelve-month period, the property will almost certainly have to be put up for sale, enforced by a Court order if necessary. If you own the property with someone else they may be able to make an offer to buy out your interest in the property from the Official Receiver.
The other main disadvantages of bankruptcy are the restrictions placed upon you and the stigma of having to declare oneself as a bankrupt for certain transactions.
Bankruptcy is just one of several options to be considered when you cannot repay your debts. If you are ever faced with the prospect of bankruptcy you should always look at alternatives as soon as possible such as an Individual Voluntary Arrangement or a Financial Management Plan.
A bankrupt may not:
- Obtain credit of £500 or more alone or jointly with another person without disclosing his or her bankruptcy
- Conduct business directly or indirectly in any name other than that in which he or she was made bankrupt
- Be involved directly or indirectly in promoting, forming or managing a company without the Court’s permission
- Hold certain public offices
When a bankrupt is discharged these constraints are ended.A bankrupt may open a new bank or building society account but should disclose the fact that they are bankrupt. The bank or building society may then impose conditions and limitations. Overdraft facilities or chequebooks must not be obtained, as they are likely to be dishonoured. The bankrupt must inform the Trustee of any funds available in the account, which exceed the normal living expenses, in order for the Trustee to distribute among the creditors.
What can I keep if I'm bankrupt?
You can keep any tools, books, vehicles (if low value) and other items of equipment needed personally in your employment or business. You will also be able to keep your clothing, bedding, furniture and basic household items.
What are the advantages of bankruptcy?
- For the person involved, bankruptcy provides relative peace of mind and possible automatic discharge after one year (or less in some cases).
- For the creditors, bankruptcy allows a full investigation of the debtor's affairs to be carried out.
There are many long term disadvantages associated with Bankruptcy which need to be considered before you make your final decision.
We're here to help
- Please explore the website, as it contains a wealth of information that will reduce your stress and anxiety. There is lots of information explaining the bankruptcy process and the effects it may have on you personally, such as your home and your job. Their are also guides on dealing with council tax debts, bailiffs and Inland Revenue debts, to simply reducing your outgoings.
Our panel of specialists can quickly advise you of your options if you are considering going bankrupt. Simply call the team on 0800 088 2208. Alternatively take the online bankruptcy test and find your best solution.