When you claim bankruptcy, all of your assets can be used to pay back some of the debts owed to your creditors. These assets include your possessions, home, income and more. Once this has been done, you will have to agree to certain restrictions and there will be an investigation of your financial affairs. Because of this, bankruptcy really should be a last resort when you find yourself in financial trouble. Here is a quick guide to answer your questions about bankruptcy.
There are plenty of free online resources and guides to help you get the advice you need. You may also consider joining finance forums and chat to people who are in similar situations. You may find some options other than bankruptcy out there that will suit your needs, so doing a bit of research is the best first step.
How to Apply
Once you have decided that bankruptcy is the best choice for you, you will need to apply with the court. Anyone can apply for bankruptcy, including individuals, sole traders and members of a partnership. You will need to make yourself bankrupt by petitioning the court. Not all courts deal with bankruptcy cases, so make sure you find one that does. The other way to go bankrupt is if your creditors have petitioned the court on your behalf and the court has then issued a bankruptcy order against you.
Once your bankruptcy has gone through, your case will be overseen by a “trustee.” This person is responsible for handling and managing your assets of value to be used for repaying the creditors. The trustee is either an insolvency practitioner (an authorised debt specialist) or an Official Receiver (an officer of the bankruptcy court).
With bankruptcy comes certain responsibilities and restrictions on your behalf. These include co-operating fully with your trustee, handing over bank and credit card details and not making payments to your creditors (known as the non-payment rule). The non-payment rule does not include items not listed in the bankruptcy order.
How Bankruptcy Will Affect You
In certain industries you may lose your job if you have gone bankrupt. You will also lose assets of value and might lose the financial interest in your house. If you have any spare income, that will usually go towards paying off your debt. You also won’t have the ability to get credit and your bank will freeze any accounts you hold without letting you open new ones.
How Long Bankruptcy Lasts
Most bankruptcy cases last around 12 months. After that time you will be discharged from your bankruptcy debts. Sometimes the bankruptcy will be completed sooner if the trustee has finished their work on the bankruptcy case as long as the creditors don’t object. The case can also be delayed in the event that you do not co-operate with your trustee.