A court will actually determine whether you are bankrupt. A petition is made to the court by yourself, or even by your creditors, asking that you are declared bankrupt. Because your creditors can effectively file for your bankruptcy, this means that you can be declared bankrupt without your consent. Quite a scary prospect!
Once you are declared bankrupt, then the court appoints an Official Receiver. The Receiver will interview you and ascertain how much money you have, any assets that you have and anything that can be sold to bring in money. If you have assets then an Insolvency Practitioner, sometimes known as a Trustee will be appointed to sort out the selling of your assets.
It is important to note that you no longer have control over your finances or indeed your assets- this control is with the receiver/Trustee, not with you.
The Trustee can apply to the court for an official Income Payments Order, if you seem to have surplus income. That order remains in place for 3 years, but you can be legally and officially discharged from bankruptcy after only a year.
Remember that a bankruptcy is public news. Details of the bankruptcy will be published in the local newspaper and sometimes even the nationals. Financial Associates such as your utility (gas, electricity, water) suppliers will also be told of your bankruptcy and it has significant implications for your future in terms of what control you can have over finances, ability to get a mortgage etc.
Having a good solicitor by your side will mean that your voice is heard and that the process is fair to you. It also helps you to at least feel you have a little control over what can be a very difficult and challenging experience.
How much will it cost to make myself bankrupt?
There are three fees you may have to pay:
1. The Court fee of 120 GBP
In some circumstances the Court may waive this fee; for example, if you are on Income Support. If you are not sure whether you qualify for a reduction in the fee, or if you are exempt from paying the fee, Court staff will be able to advise you.
2. The deposit of 250 GBP towards the costs of administering your bankruptcy.
This deposit is payable in all cases.
3. The fee to swear the statement of affairs.
In a County Court, no charge is made to swear the affidavit, which is part of your statement of affairs. But in the High Court or before a solicitor there is a 7 GBP charge.
If you are a married couple and you are both applying for bankruptcy, you will each have to pay separate fees. If you were in business as a partnership, each partner will have to pay separate fees, unless all the parties apply for a joint bankruptcy petition under the Insolvent Partnerships Order 1994 (Form 16).
The above fees should be paid in cash, postal orders, or by a building society, bank or solicitor's cheque. Cheques should be made payable to H M Paymaster General. Personal cheques will not be accepted.
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Tags: financial planning, finance, bankruptcy, how to go bankrupt