How To Declare Bankruptcy - Top Tips
More and more people in the UK are finding that the best way to resolve their debt problems is to declare bankruptcy. Perhaps this is because the process is not as daunting as many might think.
With the number of bankruptcies up 15% in the second quarter of 2009 compared with the same period in 2008, it is clear that bankruptcy is becoming a more popular option for dealing with personal debt.
If they declare bankruptcy, tenants and homeowners with little or no home equity are extremely unlikely to lose their homes. Fewer and fewer people seem to be concerned with the publicity surrounding bankruptcy (your name and address are published in the local newspaper) and in reality, very few people's jobs are at risk if they go through the process. Given this, declaring yourself bankrupt is not as daunting as some people might think. The following tips give a useful guide to the process.
o Step 1: Find your local court If you decide to go bankrupt, the process will take place at your local county court. As such, the first thing to do is find out where this is by searching online for 'HMCSCourtFinder'.
o Step 2: Complete an application form To declare yourself bankrupt, you will then need to complete an application form known as a Statement of Affairs (court form 6.28). You can get copies of these forms from your local court or from the Insolvency Service website (www.insolvency.gov.uk/forms/forms.htm). You can also fill in the forms online using this website.
Note: Once you have completed your bankruptcy form, it is a good idea to make at least one copy for yourself to keep.
o Step 3: Find out if you need to book an appointment at the court To declare bankruptcy you will actually have to go to your local court in person. Before you go, it is useful to phone the court to see if you will need to make an appointment or not.
o Step 4: Get together the necessary fee It is important to understand that there is a cost associated with declaring bankruptcy. The fee which you will have to pay to the court when you visit is generally 490 per person (although you may be able to claim a reduction of you receive certain benefits). You will need to pay this fee in cash.
o Step 5: Present your completed application form at the court When you arrive at the court, you will need to speak to the bankruptcy clerk. They will check your form has been completed properly and then ask you to sign a sworn statement to confirm you have told the truth. Your form is then given to a judge. You may have to have a private meeting with the judge to discuss your circumstances. However, if everything is straight forward, this may not be necessary.
Given that there are no problems with your application, the judge will be declare you bankrupt on the same day.
o Step 6: Open a new bank account Once you are declared bankrupt, all your bank and building society accounts will be frozen straight away. You need to expect this and plan to open a new bank account. Generally you will be able to open a simple bank account with no credit facilities.
o Step 7: Speak to the Official Receiver The Official Receiver will arrange an interview with you. This may be on the same day or more normally at a later date. The official receiver will tell you whether you should make a payment towards your creditors each month and what this will be. After your interview, the Official Receiver will tell your creditors about the bankruptcy and send them a report with a summary of your financial situation. You will not have to contact the creditors yourself.
o Step 8: Buy back the title to your property If you are a home owner, the title to your interest in the property will transfer to the official receiver when you declare bankruptcy. If there is little or no equity in your property, you should act to buy back this title straight away for a nominal sum plus solicitors fees (normally a few hundred pounds).
Generally you will be bankrupt for 12 months. After this the bankruptcy will end and you will be discharged (although individuals with no property may be discharged earlier than this). Any of your debts which remain unpaid at this time are written off.
With reducing house prices and diminishing home equity, many more people are finding that they have nothing to lose and everything to gain from declaring bankruptcy. The process is not as daunting as it might first appear and, given that you complete the application forms fully and properly, can be very straight forward. However, it is extremely important to note that bankruptcy is a very serious matter. Before deciding to declare bankruptcy, it is vital to get advice from a debt management expert.
With the number of bankruptcies up 15% in the second quarter of 2009 compared with the same period in 2008, it is clear that bankruptcy is becoming a more popular option for dealing with personal debt.
If they declare bankruptcy, tenants and homeowners with little or no home equity are extremely unlikely to lose their homes. Fewer and fewer people seem to be concerned with the publicity surrounding bankruptcy (your name and address are published in the local newspaper) and in reality, very few people's jobs are at risk if they go through the process. Given this, declaring yourself bankrupt is not as daunting as some people might think. The following tips give a useful guide to the process.
o Step 1: Find your local court If you decide to go bankrupt, the process will take place at your local county court. As such, the first thing to do is find out where this is by searching online for 'HMCSCourtFinder'.
o Step 2: Complete an application form To declare yourself bankrupt, you will then need to complete an application form known as a Statement of Affairs (court form 6.28). You can get copies of these forms from your local court or from the Insolvency Service website (www.insolvency.gov.uk/forms/forms.htm). You can also fill in the forms online using this website.
Note: Once you have completed your bankruptcy form, it is a good idea to make at least one copy for yourself to keep.
o Step 3: Find out if you need to book an appointment at the court To declare bankruptcy you will actually have to go to your local court in person. Before you go, it is useful to phone the court to see if you will need to make an appointment or not.
o Step 4: Get together the necessary fee It is important to understand that there is a cost associated with declaring bankruptcy. The fee which you will have to pay to the court when you visit is generally 490 per person (although you may be able to claim a reduction of you receive certain benefits). You will need to pay this fee in cash.
o Step 5: Present your completed application form at the court When you arrive at the court, you will need to speak to the bankruptcy clerk. They will check your form has been completed properly and then ask you to sign a sworn statement to confirm you have told the truth. Your form is then given to a judge. You may have to have a private meeting with the judge to discuss your circumstances. However, if everything is straight forward, this may not be necessary.
Given that there are no problems with your application, the judge will be declare you bankrupt on the same day.
o Step 6: Open a new bank account Once you are declared bankrupt, all your bank and building society accounts will be frozen straight away. You need to expect this and plan to open a new bank account. Generally you will be able to open a simple bank account with no credit facilities.
o Step 7: Speak to the Official Receiver The Official Receiver will arrange an interview with you. This may be on the same day or more normally at a later date. The official receiver will tell you whether you should make a payment towards your creditors each month and what this will be. After your interview, the Official Receiver will tell your creditors about the bankruptcy and send them a report with a summary of your financial situation. You will not have to contact the creditors yourself.
o Step 8: Buy back the title to your property If you are a home owner, the title to your interest in the property will transfer to the official receiver when you declare bankruptcy. If there is little or no equity in your property, you should act to buy back this title straight away for a nominal sum plus solicitors fees (normally a few hundred pounds).
Generally you will be bankrupt for 12 months. After this the bankruptcy will end and you will be discharged (although individuals with no property may be discharged earlier than this). Any of your debts which remain unpaid at this time are written off.
With reducing house prices and diminishing home equity, many more people are finding that they have nothing to lose and everything to gain from declaring bankruptcy. The process is not as daunting as it might first appear and, given that you complete the application forms fully and properly, can be very straight forward. However, it is extremely important to note that bankruptcy is a very serious matter. Before deciding to declare bankruptcy, it is vital to get advice from a debt management expert.