Bankruptcy Procedure

From many points of view, filing for bankruptcy can be one's last resort. Bankruptcy is a legal procedure, ultimate way of dealing with debts you cannot pay. Your assets will be used to pay your creditors, namely, the persons you owe money to. You will be a subject to quite many restrictions and you will be considered discharged, or freed from your debts after a court established period of time.

Anyone is able apply to the court to decide them bankrupt, not only companies, but also individuals, sole traders or partnership members. But it must be kept in mind that the procedures for companies and partnerships will be different from those for individuals or self-employed personas.
It is only a court of law that can declare you bankrupt, and also not every courts deals with bankruptcy cases. It can be a volutary decision you will be able to make, thus you can make yourself bankrupt by petitioning, or applying, to the court. Also, your creditors can usually do that for you, petition the court if you owe them at least £750. Afterwards, you are bankrupt once the court issues a bankruptcy order against you.
Bankruptcy fees and procedures you have to follow are different in states of UK and these are also different in Northern Ireland and Scotland.

The next step after this is that you have to hand over any assets of value and also you will have to cooperate with the trustee - a person appointed to manage your bankruptcy – and hand over the financial interest in your home. Your trustee will be either an insolvency practitioner, namely an authorised debt specialist, or an Official Receiver, an officer nominated by the bankruptcy court. Since appointing a trustee will take a bit of time, this Official Receiver will manage your bankruptcy at first. They will collect all information on your finances and will also protect your assets for your creditors.
If your assets are significant, it is likely the Official Receiver will recommend your creditors to appoint an insolvency practitioner as trustee. If that is not the case, then the Official Receiver will continue acting as trustee.

As part of your bankruptcy petition, you will have to complete the following bankruptcy forms:
Debtor’s Bankruptcy Petition.
Statement of Affairs, Debtor's Petition.
These forms can be obtained from The Insolvency Service website or you could buy them from a legal stationers. For help filling in the forms, you should best contact your local Citizens Advice Bureau or the Insolvency Enquiry Line
Telephone 0845 602 9848, Monday to Friday 8.00 am to 5.00 pm.
It will be necessary that you give the reasons why you are applying for bankruptcy in the Debtor’s Bankruptcy Petition.
Also, you will be required to list all your assets (cash, property, shares and / or other valuables) and the sum of unsecured debts, including the names and addresses of all your creditors, in the Statement of Affairs.

There are certain restrictions you must agree to when you are declared bankrupt. Among these are the necessity for you to cooperate fully with your OR and trustee, hand them over your credit cards. Also, you are required to stop making payments to your creditors. There are certain limited exceptions to this non-payment rule. You must continue to pay any debts not listed in your bankruptcy order. These usually include things like court fines and student loans.
The set of restrictions you will have to obey is as it follows:
You cannot borrow more than £500 without telling the creditor that you are bankrupt.
You cannot hold the position of director of a company.
You are not allowed to create, manage or even promote a company without the court’s specific permission.
You cannot manage a business without letting those you do business with be aware of your bankruptcy.
You cannot work as an insolvency practitioner, meaning an authorised debt specialist.
It is considered a criminal offence to break any of the bankruptcy restrictions. You should contact your local Citizens Advice Bureau or the National Debtline if you need counseling and free help on how the bankruptcy restrictions can affect you.
If you learn about other's bankruptcy restrictions'violation, you can offer informations to The Insolvency Service. Telephone their enforcement hotline (0845 601 3546) or use their online form

Your state of bankruptcy usually lasts for 12 months from the date that the court declared you bankrupt. At the end of this term, your bankruptcy and the bankruptcy restrictions usually come to an end and will be lifted. Although it is possible to prolong the period for your restrictions for 2 to 15 years after your bankruptcy ends if dishonest, careless or criminal behaviour were the main causes of your bankruptcy.

After you have been declared bankrupt, the OR will complete a report on the causes of your bankruptcy. This report will help the OR identify any careless or dishonest behaviour on your part. Your duty is to help the OR write their report, and in order to that that, you will be asked to provide copies of your bank statements, letters to and from your creditors and financial application forms, like the ones for credit cards, loans, overdraft requests. If you do not comply with this request it could lead to further court action.

If there are no further complications, no doubts about you commiting to the terms of your bankruptcy and no evidence of violating the restrictions, then after those twelve months have passed, you will be discharged and will finally manage to carry on with your life now debt free.

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