Cutting through the confusion surrounding Bankruptcy
You have found yourself in a position where you have been declared bankrupt, either through your own petition or that of a creditor. You may have been speaking with the people in your local pub and are now either worried sick or blissfully unaware of what bankruptcy actually entails. So, I would like to explain some of the bankruptcy myths that have been quoted to me over the years.
“I saw on EastEnders that Ian had all his furniture removed by his trustee”
This simply does not happen, home visits are very rare and only items of exceptional value will be removed.
“I have children, you cannot touch my house”
Your spouse and children only have one year right of occupation after that time the creditors needs outweigh theirs (unless there are exceptional circumstances). Thereafter, the trustee will take steps to realise his interest in the property. A last resort would be for the sale of the property. The trustee has three years in which to deal with property but if there is equity of £1,000 or less the property will be transferred back to you.
“I will have to stop trading”
No, you can continue in trade as long as it in the same name as that in which you went bankrupt and the tools of your trade will usually be exempt. This is also subject to complying with the rules regarding obtaining credit.
“My husband has gone bankrupt, I will lose my assets”
No, only assets belonging to the bankrupt can be realised. You are not responsible for his debts.
“My car will be taken away”
Once again this will only happen if the vehicle is of high value but a replacement will be provided of lower value if a vehicle is needed for work or domestic purposes.
“I will be bankrupt for ages”
The normal period of bankruptcy is 12 months before you receive your discharge, but this can be increased due to non-compliance. Although you have received your discharge, it may take longer for the Trustee in bankruptcy to deal with your estate.
“I will never be able to get credit again”
Although it may be harder for you to obtain credit once you receive your discharge there are no restrictions on you obtaining credit.
“I cant have a bank account”
There is nothing to preclude you holding a bank account whilst you are bankrupt.
“I will have to pay everything back and I cant afford that”
You will only repay creditors to the extent of your assets. If you have no or insufficient assets, the debts will be written off. Your family income will be looked at and depending on the surplus available you may be required to make monthly payment for a period of three years.
“If I just ignore my trustee there is nothing he can do”
A trustee in bankruptcy can request that you are examined before the bankruptcy court to answer questions about your affairs and if you fail to attend an arrest warrant can be issued.
You can find additional information about bankruptcy on the GOV.UK website. Alternatively, to discuss the options available to you with a qualified Insolvency Practitioner the please call Amanda Ireland or me on 01795 433655.