Bankruptcy is one of the ways in which you can deal with your debts; however, it is not necessarily the only or the best option open to you. The restrictions you have to adhere to after bankruptcy and the official investigation into your finances can be severe and have long lasting effects. It is advisable to check if other debt solutions may be preferable in your situation rather than going straight for the personal bankruptcy option. When you are made bankrupt any assets you have are sold to go towards settling your debts. Assets can include property, personal belongings such as your car, furniture or consumer products, shares of stock and so on. Assets after bankruptcy are officially assigned to a trustee who is appointed by the court to look after your case. The trustee can either be an official receiver or another authorised debt specialist. The trustee will need to gain access to all the relevant information regarding your assets and debts. He or she will arrange an interview with you regarding your financial affairs, normally within two weeks of the court declaring you bankrupt. The trustee will go through your assets and debts with you in detail, and list your creditors. Your creditors are then given an official declaration by the trustee outlining your financial status, the total debt owed and the next steps. This statement can take up to 12 weeks to process. You are normally entitled to keep hold of any material or equipment that you use for your work; this can include your car if you are required to travel to be able to meet your professional commitments. It is possible that you will have to sell your car and substitute it for a cheaper model, or give it up altogether if you can travel by public transport instead. Bankruptcy can mean that you have to transfer ownership of your home to the trustee; if you are the sole owner of your home, ownership will be transferred to the trustee. The capital that is raised by your home’s sale, less the outstanding mortgage on the home, is then used to pay off your creditors. Sometimes this can mean that all your debts are cleared, potentially leading to an annulment. Being declared bankrupt normally costs 600. There is a 450 deposit and a further 150 court fee. The court fee is sometimes waived, such as in cases where the debtor is claiming benefits. The cost is per individual; in cases of couples, for example, the 600 is charged individually to both husband and wife, or both civil partners. It normally takes around a year to be cleared of your debts after having been made bankrupt. It is sometimes possible to be discharged early if your debts have eased after asset sales. The Debt Advice Group can give you specialist bankruptcy information and counselling. Remember that it may not be the best option; the Debt Advice Group can help clarify your situation and may be able to suggest alternatives, such as an IVA (Individual Voluntary Arrangement).
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