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Bankruptcy

As from the 1st April 2004 The Enterprise Act 2002 - Law Governing Bankruptcy has changed and most bankruptcies will be discharged within 12 months.

The treatment of assets has now been changed. The Act sets a limit of 3 years on the period during which the trustee in bankruptcy can deal with your interest in a home which is your only home or your spouse or a former spouse main home. After this period, it will revert back to you and it will no longer form part of the bankruptcy estate.

The purpose for the changes is to give a better chance to people to start again who were bankrupt for genuine reasons.

The position will be different if you have been an un-discharged bankrupt more than once in the previous 15 years and still un-discharged at the time the new law came into force. In this case, if the court has previously granted a discharge, that order will continue to determine that date of discharge.

If no such order has been made, the bankrupt will be discharged on 1st April 2009 (5 years on from 1 April 2004), or by a court order. People made bankrupt through a criminal bankruptcy can only be discharged by order of the court.

If you are made bankrupt for the second time after 1st April 2004 you will be discharged after one year, the same as anyone else unless the Official Receiver decides to suspend the discharge date or apply for a Bankruptcy Restriction Order.

If you are currently bankrupt, and your bankruptcy term will last beyond 1st April 2005, you should be discharged one year from 1st April 2004. If you are currently bankrupt and your bankruptcy order finishes in less than 1 year from the 1st April 2004, the order will end as normal.

Severe penalties will be imposed on those who are considered to have brought about their bankruptcy through reckless or irresponsible behaviour.

A County Court Judgement (CCJ) will remain registered for the period of six years in any case, whether the debt has been fully paid off within this time. A note will be added on the record if the debt is paid off. All creditors will be made aware of County Court Judgement for the duration of this period.

Bankruptcy is a serious matter

01	Just because you are in debt, you do not have to become bankrupt
02	Have you considered all of the other alternatives?
03	Do you think other option may be more suitable?
04	Can you honestly not clear your debt without being Bankrupt?
05	Having considered all the other alternatives, if you still want to go ahead with the Bankruptcy then you can petition for your own bankruptcy at your local county court.
06	The cost Personal Bankruptcy Petition £450 (£140 court fees and £310 Official Receivers fees) People on means tested benefits may be exempt or pay a reduced Court Fee
07	The Creditor's Process of making you Bankrupt You will publicly examined in the court as the Bankruptcy allows a full open investigation of your affairs in the court and if the creditor can prove that you are unable to pay or you have no intention or ability to pay your debts and that you could be made Bankrupt, then an appeal is made and after the hearing takes place, the court can make an order if the application is successful.
08	An Official Receiver will then be appointed. The Receiver will make an application to the court to claim the amount left over after deducting your essential living costs for your family and yourself.
09	Your property and any other valuable assets can also be claimed by The Official Receiver including motor vehicle.
10	You will need permission from your lender to obtain credit this will be subject to a limited amount.
11	You may not be able to petition for bankruptcy if you are in certain occupation or profession. If you are Lawyer, Chartered Accountant, Justice of Piece, School Governor or company Director you will not be able to practise or continue in your profession any more. You will not be able to become a Member of Parliament.
Bankruptcy Restriction Orders
Orders may be applied for by the Official Receiver for:-
01	Not maintained or unable to produce the accounts
02	Knowing full well inability to repay and accumulating debt before filing for bankruptcy
03	Debt increased prior to Bankruptcy due to:-
A.	Spending generously
B.	Gambling
C.	Knowing full well spending unreasonably

Restrictions after Bankruptcy could last for a further two to fifteen years.

Going Bankrupt for genuine reason will give you peace of mind as after a minimum period of one year you will no longer be liable for the debts included within the bankruptcy.