State of assets held during Bankruptcy

Bankruptcy is your inability to repay your debts even after they are due and one can declare it by court to write-off all the debts. But this does not happen as easy as said as the court will seize most of your assets and also lay restrictions on you for your future borrowings. Depending on your types of assets and its ownership, the court can decide to sell or retain so as to repay the creditors. It is therefore necessary to know the implications bankruptcy would have on your assets before you declare so as to protect them.

The court seizes most of your assets and freezes your account as soon as you declare bankruptcy. The court appoints an official receiver who will take control of your assets and will sell them accordingly in the interest of the creditors. The appointed official receiver will normally take control of any luxury items and assets irrespective of whether it is in your name or is being shared with a partner.

The court would seize any leased or freehold land or property in your name to sell and clear off the debts of the creditors. Any equity that you hold in the house will be sold either to a third party buyer or the concerned partner of the asset. In case the asset is a family household and if your family is staying in it, then the official receiver will wait till end of the year to sell it so as to provide enough time to make alternate arrangements. There will not be much effects in case you are currently in a rented house other than a notice to your landlord about your bankruptcy.

In case you have one or more vehicle in your possession, the court might also levies restrictions on the maximum value of it. The vehicle can be retained as long as its purpose is more of a necessity than a luxury. The value of the vehicle should not be greater than £2500 and in case more than £2500, the court will suggest either it to be sold or any friend or family help you retain by paying the amount excess of £2500. In case you decide to sell the vehicle, the court will permit buying one more that is not more than £2500. In some cases where your vehicle is a special one related to your work activity, the court will allow you to retain it considering the need for you to work and earn. Any other vehicle other than the primary one will be sold for paying off debts to the creditors.

The concept of bailiffs moving all the furniture out of your house are no longer valid as the official receiver handles seizures of furniture and other household items in a refined manner. You can hold on to all reasonable and essential household items and furniture even after declaring bankruptcy. The court will remove expensive and luxury items and will suggest replacement with items of cheaper value. The money obtained by selling these articles is used in the interest of the creditors. Plasma television, higher-end sound systems, etc. are considered expensive household which the court can consider for sale. If in case any of these goods belong to a friend or a relative, the court will not order sale of those items provided you can prove its ownership.

Pension fund is normally not used for purpose of settling debts by the court but it would ask you to stop payment for these funds during the period of bankruptcy. Any windfall or any interest received by means of a will might be taken by the official receiver for settlement purposes.
The court will expect you to repay as much of the money payable to your creditors and this includes payment on a monthly basis to the court which can be diverted towards your debt. The official receiver will analyse your monthly income and expense standards and can add an income payment order based on it. These income payment orders can run for a period of 3 years during which they are frequently monitored and modified depending on your payment capacity.

During the period of bankruptcy, the court will also expect you to submit all details of your assets and other items for consideration of sale for debt repayment. The court will monitor for any major sale of assets for very less value within the last five years and such transactions will be forfeited by the court. This is to prevent you from transferring any property held by you to someone’s name for the sake of safeguarding the asset during bankruptcy. As a last tip of note, your co-operation with the court and the official receiver will make it easier for you to complete your bankruptcy procedures and get discharged so as to start afresh at the earliest.

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