If you’re thinking of applying for bankruptcy, then you’re probably wondering what happens during the process. You also need to be sure that it’s the right thing for you to do as, while it can give you a new start, bankruptcy has lots of impacts upon your life for several years, even after it’s discharged.
You need good and objective advice from companies like Creditfix before you make your application, just in case there’s another solution.
You start by filling the bankruptcy form and paying the fee
You’ll find the form on the GOV.UK site; the fee is £680 and is non-refundable unless you cancel your application before submitting it.
Paying the fee online means you can pay it in instalments (the minimum is £5) but if you go to a bank to pay it, you have to pay it in full.
You should withdraw some money for living expenses
There may be a few days between submitting the form and the official receiver (OR) taking control of your finances and property, but your bank or building society might freeze your accounts straight away. You need to withdraw as much money as you’ll need for at least a month if this is possible.
You submit your form
Once you’ve finished the form, you’ll be asked to confirm you’re the person named in the application and that the information is all correct. You also need to agree to a credit check.
It’s important that you don’t supply any false information or exclude details of property or money in the application as this is a criminal offence and could lead to a fine or even a prison sentence.
You wait for the adjudicator’s decision
The adjudicator has to decide to accept or reject your application within 28 days. Sometimes they’ll need more information so if they ask you for more details, they have an extra 14 days to decide.
If you’re rejected you can ask for a review. If the review still results in a rejection you can appeal in court. You’ll need form N161 from the GOV.UK site.
Your application is accepted and your bankruptcy order is made
When your order is made, you’re officially declared bankrupt and your accounts will be frozen immediately.
You have to cooperate with the official receiver
Your money and property are now under the OR’s control and they should be in touch within two weeks of the order. You’ll have an interview, usually via telephone, to talk about your bankruptcy.
Going forward, the OR will oversee your bankruptcy by distributing money and/or property to your creditors or by overseeing your appointed bankruptcy trustee. You have to cooperate with everything, no matter how you feel.
You’ll probably have to open a new bank account
If your accounts are frozen, you’ll need to open a new account for your earnings, benefits and bills. You’ll probably find that lots of banks reject your applications, so aim for very basic accounts with no overdraft facilities. Your bank and the OR may let you use an existing account if necessary, but it will be quite restricted.
Your discharge from bankruptcy
You’ll be discharged from your bankruptcy one year after the order, as long as you cooperate with the OR.