Bankruptcy FAQs

Questions:

• Bankruptcy
• Should I go Bankrupt?
• How long does bankruptcy take?
• Will I lose my possessions?
• Can I have a bank account?
• Will other people know I'm bankrupt?
• Is my job safe?
• What advice should I get?

Answers:

• Should I go Bankrupt?
  

  Bankruptcy is a scary thought for most people. Put simply it means that you are unable to repay your creditors.

  Going bankrupt happens when there are are no alternatives. Bankruptcy is not necessarily bad as it provides people with an opportunity to sort out their financial situation. Bankruptcy is not something that lasts forever which is a very important point to remember.

  There are two types of bankruptcy:

  • Voluntary Bankruptcy - Where you declare yourself bankrupt
  • Involuntary Bankruptcy - Where a creditor tries to make you bankrupt
  Before declaring yourself bankrupt, it is vital that you have look into other avenues that may be available to you such as debt consolidation loans, IVAs, informal agreements, administration orders and other debt management plans. Often one of these alternative solutions may prevent your own personal bankruptcy and provide you with the same level of financial help you need.

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• How long does bankruptcy take?
  

  Bankruptcy usually takes one year. However, the length of time your bankruptcy takes does largely depend on you. If you co-operate with your Insolvency Practitioner or the Official Receiver you are likely to be discharged from your bankruptcy in a year, regardless of how much you owe.

  If you fail to co-operate, your bankruptcy may well last a lot longer than a year. In some cases the term can be shorter than a year but this is rare.

   

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• Will I lose my possessions?
  

  People have a misconception that bailiffs will turn up after you have declared yourself bankrupt to seize your Television and other personal possessions. This is not true. Bankruptcy is designed to prevent this from happening. Your non-essential assets and any excess income will be used to pay your creditors. However, your house is considered a non-essential asset and so that could be used to pay off creditors.

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• Can I have a bank account?
  There is nothing in the insolvency legislation which prevents a bankrupt from holding an account. However, you should let the bank or building society know that you are bankrupt as they may want to impose some conditions and limitations on your account such as not providing a cheque guarantee card. Also, you should never obtain overdraft facilities without telling the bank that you are bankrupt.

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• Will other people know I'm bankrupt?
  

  Bankruptcy Orders are advertised in in a local newspaper to your area. The details are also placed on a bankruptcy register maintained by the Department of Trade & Industry and the Insolvency Service. As this is a public document it can be seen by the public on the internet.

  Anyone who you have had a financial relationship with will be told of your bankruptcy. This includes banks, building societies, mortgage and secured loan companies, hire purchase companies, landlords and other people you owe money to such as pension and insurance companies.

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• Is my job safe?
  

  Not always.

  If you are a member of a professional body you will need to check to see if you will lose your membership of that body. If that happens it can result in your being unable to continue in your current position.

  For further clarification please take a look at the terms of your contract of employment.

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• What advice should I get?
  

  Always seek your own financial advice about becoming bankrupt and what other options are available to you. Official bodies such as the Insolvency Service & courts won't help you decide on the best way forward.

  Debt Advisory Line will assist you when considering your own circumstances. We can advise on the best solution available to you.

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