What is Bankruptcy?

Bankruptcy offers the opportunity to make a fresh start in circumstances where the debts you owe are overwhelming and there is little prospect that you will ever be able to clear them or make an offer to settle them.

Bankruptcy is sometimes seen as a last resort since it means any significant assets you may own, such as equity in your home if you are buying it, are likely to be used to help settle your debts. It also places some restrictions on your ability to obtain future credit, carry on business and hold certain public offices.

How does Bankruptcy work?

You can petition for your own Bankruptcy by obtaining the appropriate form from the Chancery and Bankruptcy Division of the High Court. A fee is payable when the petition is taken to the Court, currently £310 plus a Court fee of £62. In certain cases e.g. if you are living only on benefits, the Court fee may be waived. It is also possible for a creditor to petition for your Bankruptcy if you owe the creditor more than £750 but it is rare for this to happen in normal consumer debt cases.

The Official Receiver is the Court officer who handles the administration of your Bankruptcy . The Official Receiver will agree what is to happen to any assets you may have and, in cases where you have sufficient income to make regular payments, how much the payments should be and how long they will be made for. After a Bankruptcy order is made he/she will inform your creditors. Creditors can then take no further action against you.

How long does Bankruptcy last?

You are normally "discharged" from your Bankruptcy after one year.

You will continue to pay into your bankruptcy for 2 years if you file your own bankruptcy and owe less than £20,000.

You will continue to pay into your bankruptcy for 3 years if someone else makes you bankrupt or you owe more than £20,000.

Longer periods may apply if this is not your first bankruptcy or you have a large surplus income to pay into your bankruptcy.

Will they take everything I have?

No. In most instances your household goods will not be taken. Exceptions would be antiques, for example, an antique table and chairs could be sold and you would be given money to buy more basic replacements. If you own a car, the Official Receiver will take into account its value and whether it is essential to you before deciding whether to remove or sell it. The tools of your trade are normally exempt.

Who will know?

Your Bankruptcy will be reported in the local paper and the Stubbs Gazette. The Official Receiver will contact your creditors.

Will I lose my job / pension?

This will depend on your job. Consult your union / personnel department / pension scheme administrator for advice.

What will happen to my credit rating?

Bankruptcy Orders are kept on credit files for six years. If a Bankruptcy Order has been annulled and you provide the Credit Reference Bureau with the certificate, it will be deleted from your credit report.

  Where can I get more information?

The Insolvency Service produces a number of useful booklets and leaflets including: -

• A Guide to Bankruptcy

• Dealing With Debt - How to Petition for Your Own Bankruptcy

• What Will Happen to my Home?

• What Will Happen to my Bank Account?

More information is available from www.detini.gov.uk. Or contact The Insolvency Service, Fermanagh House, Ormeau Avenue, Belfast, BT2 8NJ. Telephone enquiry line 0289 025 1441.