Questions about bankruptcy
If you are a debtor and are thinking of applying for bankruptcy, there may be several questions that arise in your mind. Some of the commonly asked questions are:
How does the bankruptcy process start?
A bankruptcy process can start if you owe £750 or more to any one of your creditors and cannot pay back the amount. You can file a petition in the bankruptcy court expressing your inability to repay the amount and once your case is reviewed, you can be declared bankrupt. Alternately, your creditor may file a bankruptcy petition against you in the court.
What are bankruptcy court fees?
You need to pay three types of fees.
- The court fee of £120: This fee can be waived by the court, if the applicant is living on Income Support.
- Administration fee of £250: The payment of this fee is mandatory irrespective of your financial condition.
- Swearing the statement fee: You do not have to pay any fee to swear the affidavit in the county courts. But if your case is in the High Court in London, you have to pay a charge of £7.
If you are a married couple or partners in business and each one of you is applying for bankruptcy, you will have to pay the fees separately. However, you would need to pay just one fee if you are applying jointly under the Insolvent Partnerships Order 1994 (Form 16).
These fees can be paid in cash, postal orders or by a building society, bank or solicitor’s cheques. Cheques should be paid favoring H M Paymaster General. Personal cheques are not accepted.
How long does the bankruptcy last?
In normal circumstances, the bankruptcy lasts for a period of twelve months. If you cooperate with the Official Receiver appointed by the court, it may even end sooner. It may also take much longer if you do not comply with the provisions of law.
Will I be deprived of my house and car?
You are most likely to be deprived of your house because it is your major asset from the sale of which payments can be made to the lenders. Your car, if cheap, may be spared if it is considered essential for your work and survival.
What is a bankruptcy discharge?
When you have been released from the restraints of the bankruptcy order, you are said to have been discharged. The court issues you a certificate to that effect but you have to pay a charge for obtaining this certificate. Moreover, the discharge does not mean that you are freed from paying the debts that you have been ordered to pay generally through the sale of your assets.