The bankruptcy process has changed considerably since April 2016, the most significant of these being that it is now an online process which no longer requires a court appearance. The somewhat intimidating forms of pre-April have been replaced by a single 8-part online application which combines the previous Statement of Affairs and Debtors Petition.
You enter into the protection of Bankruptcy to do exactly that; to protect yourself from creditors and to make a fresh start. Under Section 283(2) of the Insolvency Act you are allowed to keep the tools of your trade, all clothing, bedding, furniture and even your car (provided it’s worth less than £1,000), the general principle is that your goods and chattels are safe.
Enterprise Act 2002
With the introduction of the Enterprise Act 2002 in 2004, the mandatory period required to serve under Bankruptcy was reduced from three years to one. In some cases, bankrupts can be discharged from bankruptcy earlier at the Official Receiver’s discretion. An early discharge is possible provided no creditors object. For those granted an early discharge, the average discharge period is around 7 months.
Your name no longer appears in the local newspaper when you enter into bankruptcy – this stopped in April 2009. However, there are some exceptions / restrictions. For example, your name will still appear if you were a sole trader and there were substantial amounts owing to other traders in the local community.
To find out more about the common misconceptions in personal bankruptcy, please read our ‘Bankruptcy Questions’ half way down the home page to the right, or simply speak to one of our advisers and have it all explained to you.
Things you can keep
- Tools, books, vehicles, and other items of equipment necessary for your personal use in your employment, business or vocation; and clothing, bedding, furniture, household equipment (for example, a cooker) and possessions necessary for satisfying your basic domestic needs of you and your family.
- You will be able to keep most household items, including furniture, televisions and similar items.
- Vehicles up to the value of £1000 are safe in bankruptcy provided they are required for work purposes.
- Bank accounts are generally not under threat provided there is no debt with the bank in question.
- Properties in negative or level equity are not affected provided you maintain mortgage payments.
And now a word of caution for those attempting the online application without thoroughly understanding the implications. The Income and expenditure section invites us to claim expenses for all manner of forbidden items, including entertainment, tobacco, alcohol and social clubs. But guess what, none of these things are allowed! This means that if you had included any of these expenses in your I and E, they will be dismissed out of hand and the Official Receiver will impose an Income Payments Agreement (IPA).
Call us on 01425 600129 and we’ll explain everything to you in simple terms and go through your Income and Expenditure on the phone.