Can I Reverse A Bankruptcy?

It may happen many times that you filed the bankruptcy petition and your application has been successfully granted and then you change your mind and don’t want to go bankrupt.
Since you already have been declared bankrupt, you will have to stop your bankruptcy to take its further course of action. The process of reversing bankruptcy is called annulment of bankruptcy. There are several reasons why you need to initiate a reversal process when you changed your mind not to be part of bankruptcy any more.

You can apply for annulment of your bankruptcy in cases when:
the bankruptcy order has still to be made, this is because the process of obtaining the order was not followed properly by your solicitor; or
you have paid off all your outstanding debts and also the fees and expenses of the bankruptcy proceedings in full or made a guarantee of paying them to the satisfaction of the court; or
the agreement of “Individual Voluntary Arrangement” has been made between you and your creditors where you will pay off all your debts or a certain part of it.
Many people often believe that once the process of bankruptcy has been initiated, it is not possible to cancel the process. However, the process of bankruptcy can be cancelled under some unusual conditions only.

If the debtor settles his all debts before the hearing for bankruptcy starts, the process of bankruptcy can be cancelled. The process can also be cancelled if you can manage to enter into an Individual Voluntary Arrangement (IVA) with your creditors. At any time before the bankruptcy order is passed if you feel that misleading information regarding your debt status had been given to you and that bankruptcy was not your sole option, your application for annulment of your bankruptcy will be heard by the court.

The first step for applying for the bankruptcy annulment is to get an affidavit in this regard from the court. In this affidavit, you will get an opportunity to explain why your bankruptcy should be cancelled or not implemented. The affidavit will be submitted to the court and the date of hearing of your annulment application will be conveyed to you. You will also have to inform your Official Receiver about the date of hearing and will have to send a complete duplicate set of your application. If your annulment is granted then the court will make a decision on the expenses related to the bankruptcy court proceedings and will held responsible the right person(s) or entity for bearing the expenses.

What happens to assets in case of reverse bankruptcy?

The fate of your assets depends on the period since when you are under the bankruptcy. If you get enough money after your bankruptcy to pay off all your outstanding debts of your creditors, you will become eligible for an annulment. After paying off all your debts, you will get back your pre-bankruptcy status. But assets which already been sold prior to the bankruptcy annulment cannot be returned back. All assets which are still not sold will be returned to you, if your bankruptcy is cancelled.

How to apply for an annulment of your bankruptcy?

You can only get a bankruptcy annulment order in the court. The court where your bankruptcy order is to be passed, you need to approach the same court immediately for applying for an annulment. You will have to request for an application citing valid reasons for your annulment. You may have to furnish an affidavit or a witness of statement to substantiate your claims. At the same time, you need to notify the Official Receiver about your bankruptcy annulment application.

Along with your application, furnish all the documents that will show that you have paid off all your debts in full. You need to do an additional paperwork if you have signed an IVA with your creditors. These documents are very important to prove your case in the courts and ensure annulment of your bankruptcy. By getting an annulment order, you can save your credit record and save yourself from embarrassing situations. You will also have to meet the Official Receiver with all documents that the Official Receiver will seek from you. Your annulment could be deferred by the court if you don’t meet your Official Receiver or the Official Receiver tells the court that you failed to furnish right documents substantiating your claim.

With the annulment of your bankruptcy, your pre-bankruptcy status will be established and you can make an application to stop all advertisements announcing your bankruptcy status.

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