How long does Bankruptcy last?

For a bankruptcy to take effect, it requires a bankruptcy petition presented by a court of law, which can be presented either by a debtor or the creditors owed. As it is very expensive and difficult, it is safer to reach a settlement agreement with creditors, than trying to dispute the claim against you as even refusing to agree with a bankruptcy order, it can still be made against the debtor.

In order to declare yourself bankrupt there are three different fees payable by a debtor, namely a court fee, which you have to apply for, as it is waive able in some cases, or it could be reduced. A deposit of 450 pounds are payable in all cases towards the costs of administering the bankruptcy. In a High Court there is also a fee payable to swear an affidavit on the state of your affairs, business partners or husband and wife, are under law required to pay separate fees when applying for a bankruptcy.

When applying for a bankruptcy, debtors should contact their nearest county court that deals with bankruptcy, if a bankruptcy petition is presented against them, as it can happen without you being present if you normally live in the area of the court where the application was applied for. Courts may not decide upon a petition immediately as they would investigate the financial information provided or rather perform an administration order as opposed to bankruptcy.

Unless a private sector insolvency practitioner is ordered, the Receiver will act as Trustee of your estate, who will be responsible for making payments to your creditors and disposing of assets, for which they require a list of assets and amount due for debt. Debtors are not allowed bank accounts or obtain credit during bankruptcy, unless they inform the bank beforehand that they were declared bankrupt. Debtors are also advised not to make any direct payments to creditors after being declared bankrupt.

A bankrupt debtor may be freed from bankruptcy law after one year, although the bankruptcy will stay and remain on file at the credit reference companies for a minimum of six years. When a bankrupt however have been declared bankrupt previously, then they will only be able to apply through the court to be freed after a period of five years. Reckless behaviour that resulted in bankruptcy could result in a period of fifteen years of bankruptcy.
When declared bankrupt individuals are allowed to keep clothing, bedding, and basic household effect or if in business bankrupts, they are allowed items specifically needed in business, like tools, if of low value. A better option before bankruptcy will be to confer with creditors to come to an informal settlement or to try to obtain an administration order. This is only allowed if the debtor owes the creditors less than five thousand pounds.

Criminal offences in bankruptcy which the bankrupt can be indicted on in the Crown Court, will include, fraudulent disposing of property during bankruptcy, property sold that was obtained on credit and not paid for yet, cars and expensive items not disclosed or being sold, failure to deliver books and records or altering them. The law places obligations to the bankrupt that has to be met, or the bankruptcy can be extended for a further two to fifteen years, depending on the offence.

In order to file for bankruptcy a debtor must owe over seven hundred and fifty pounds, which after the bankrupt only have to apply for bankruptcy and pay the filing fee. Before petitioning for your own bankruptcy, a bankrupt should seek professional advice regarding a pension policy that the bankrupt may have, as the bankrupt’s rights may be affected. A bankruptcy will not affect secured lending such as secured loans, mortgages, or car finance, although while under the bankruptcy order, and the bankrupt wins or inherits a large amount of money, they might have to pay back the creditors, but after the order has been made, trustees and creditors may not take any newly acquired assets.

Although bankruptcy negatively affects any individual’s credit score it is true that after the statuary period of twelve months, bankrupts are able to rebuild their lives. It is essential for individuals considering bankruptcy to understand bankruptcy and the consequences, as bankruptcy can either offer a solution or in the long run, create more problems. Bankruptcy can be viewed as a way of wiping away debts, but bankrupts often have a difficult time to get credit or building up from scratch.

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