Bankruptcy
Bankruptcy can rid you of debts that might have taken years to clear. However, it is not without its implications, so the close support of Cornerstone Business Recovery is vital to navigate the process smoothly.
What does Bankruptcy mean?
You can no longer be a director, shadow director or officer of a limited company.
If you and/or your business (sole traders) are insolvent, in some circumstances,
bankruptcy may be the only realistic option to resolve the situation.
You can apply for your own bankruptcy or a creditor can petition the court for a bankruptcy order. The fees for making yourself bankrupt are currently £680, being an application fee of £130 and a deposit of £550. The fee can be paid by instalments, although an Order will not be made until the fee has been paid in full. An exemption from the fee may be available in limited circumstances.
You will automatically usually be "discharged" from bankruptcy after 1 year.
You will have a duty to disclose all of your assets and liabilities to your trustee in bankruptcy and fully co-operate with him/her. A failure to do so may prolong the bankruptcy.
Naturally, certain restrictions will apply during the bankruptcy. You will be prohibited from obtaining credit over £750, with declaring you are in bankruptcy. All of your bank accounts will be frozen when you go bankrupt. You may ask for them to be released by your Trustee (usually an insolvency practitioner) and the bank itself. You may still open new bank accounts (current) but the majority of banks close down any accounts of bankrupt customers, so it can be difficult.
Many of your assets will form a part of your "bankruptcy estate." The Trustee will sell any such assets in order to pay some or all of the money due to your creditors.
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After one year most bankruptcies are discharged – meaning any restrictions placed on you by law are lifted and you are released from your debts. Unfortunately, certain types of debt will not be covered by the bankruptcy, including student loans, criminal fines, debts you owe in respect of divorce proceedings to name a few.
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You would usually apply for bankruptcy online. In rare circumstances, it will be necessary to apply to you local court for your bankruptcy,
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After the bankruptcy order is made, you may then attend an interview with a representative from the Insolvency Service (an examiner), who will assess your situation and determine whether you should make any contribution to your creditors (an income payments order or agreement). If you are required to make a contribution, it will typically last for the next three years.
What should I do?
If you are considering bankruptcy or one of your creditors is threatening you with bankruptcy,
it is essential you obtain advice about your options.
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During bankruptcy, any purchases made must be essential and no further debts should ever be taken on. If your trustee does try to claim this back, it is important a settlement is reached as soon as possible.