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Bankruptcy FAQ’s – This is the Third in the Series of Articles

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1. Who decides what a fair value for my assets is? It rather depends. If it is for example, your household items and matters of that nature which you wish to retain, then generally speaking, the Trustee will exempt items up to a value of about £1,500 without a problem. Bear in mind that £1,500 is the value of half or other appropriate share of the items within your house m or the full amount if they belong solely to you, at a forced sale value. In other words, not what you would hope to sell them for if you were simply selling the item on, and indeed not what you would insure for on a household insurance policy, but simply what you could get for those items selling at an auction. In most localities there are auction rooms which deal with items repossessed by Bailiffs or taken by Bailiffs to satisfy judgment debts. Property fetches very low prices at those auctions for example: A fully working wide screen television would fetch typically, £20-30 even though new, it may have costs £800-900.2. Can I obtain credit as an undischarged bankrupt? Yes, if the amount of credit does not exceed £500. If the credit is for more than £500, then providing you declare, whether asked or not, that you are an undischarged bankrupt, you commit no offense. That said, it would be surprising if anybody would lend you any substantial amount of money at that stage.3. Can I take credit if I am offered it as opposed to applying for it? Offers of credit are only offers to consider an application, even if you are “pre-approved”; you have to sign an application form even though some Lenders make the forms look different. Once you sign that form, that is a formal application for credit, and if you have not made the appropriate declaration, you are in breach of the law.4. Would I have to give up my mobile phone contract? The whole point about a mobile phone contract is that you are obtaining credit. The precise amount of credit will depend upon the terms of the contract but usually such contracts set a monthly line rental, typically between £20-25 per month. Very few contracts have a credit facility anywhere near £500 and the providing the combination of all the credit available under the agreement does not exceed £500 then you do not have to declare to the operator that you are bankrupt. There is, however, a further problem. Under the bankruptcy laws you are not allowed to prefer one creditor over another. That means that if you are not in position to pay all of your creditors you should not pay any of them, and of course if you do not pay your mobile bill on time then the operator is likely to bar the phone. The unpaid bill is a debt due from you to the operator and you will therefore include it in your Statement of Affairs when you present your petition. That means that the Trustee will write to the operator telling them that you are bankrupt and inviting them to prove in your bankruptcy. Most mobile phone operators will then immediately cancel the contract. There is nothing to prevent you from applying for a new contract with a different supplier who may or may not be prepared to give you one.5. Could I still get utility bills in my name? Yes, subject to the usual proviso about credit for undischarged bankruptcy. However, most utility companies will not supply an undischarged bankrupt and may insist that the supply is transferred to your spouse/partner’s name or that you have a pre payment meter.6. After I have been discharged will I be able to obtain credit and if so, how soon after my discharge? Yes you can get credit again after the discharge. You must expect the interest rate to be somewhat higher than you would have paid pre bankruptcy, although it should decrease fairly quickly if you can demonstrate a good payment track record after your bankruptcy. As will all things there are some lenders who will simply not contemplate an application from you at all, certainly not until you have repaired your credit history, or until your record of bankruptcy is still not showing on your credit file, 6 years after the date of your discharge.7. Are there any debts that will survive bankruptcy? Yes but not many. In general terms any debt that you owe in respect of an Order in Matrimonial Proceedings brought by your spouse on their behalf or on behalf of children, will survive bankruptcy, as will an Order made against you to make payments against damages for personal injuries and fines imposed by the Courts. Also student loans survive bankruptcy.8. Who inform my creditors of my bankruptcy? The Official Receiver.9. Will my creditors stop hassling me once I have gone bankrupt? They should do. As soon as you tell them that you are bankrupt and/or give them a copy of the Order, then they are obliged to deal with your Trustee rather than you. If they keep hassling you, let the Trustee know and he will take the appropriate steps. If debt collectors come to the door and will not leave then call the police who should remove them.10. Do I have a choice not to declare a certain debt if I wish not to? No, you must declare your debts no matter how large or small. Any debt not declared may not be extinguished.11. What if I forget to tell the Trustee about a creditor? Any creditor not notified of your bankruptcy because the Trustee was not told of the dent will, after your discharge, be able to make an application to the Court, the effect of which would be that you are still liable for the debt in addition to any accruing interest. This is because, if they are not notified by the bankruptcy, they do not have the opportunity to prove (claim) in it. That said, when you are made bankrupt that fact of your bankruptcy is published always in the London Gazette, a publication taken by every financial institution in the land, and the advertisement in which is deemed to be a sufficient notice to the world at large. Often, the bankruptcy is also advertised locally to where you live and/or work (if you were self employed). You will note that the Creditor has the right to apply to the Court. Obviously, if the debt is not large there is a less likely chance of the application being made and equally, id the Creditor is one of the financial institutions it is unlikely that the Court would have any particular sympathy with their application but it is a possibility.In cannot be emphasized forcefully enough that you must always tell the Trustee of any debt, however small and any asset, equally however small, that you have, at the very start of your bankruptcy period. If you subsequently remember something that you had forgotten, then tell the Trustee, straight away, as soon as you remember, however embarrassing it might be. In the long run it is for your benefit.12. If I apply for bankruptcy do I have a cooling off period to change my mind? Once the Bankruptcy Order has been made, the only way out is annulment, payment or discharge after the relevant period, there is no cooling off period.13. Do I need a Solicitor or other professional to help me file for bankruptcy? No. There is no requirement to consult a professional. However, in anything but the simplest of cases, we would recommend that you do consult Solicitors who specialize in that sort of thing or a Licensed Insolvency Practitioner, alternatively, we offer a bankruptcy ‘walk through’ whereby after consulting with you, we will complete the bankruptcy forms on your behalf and even attend court with you if necessary.14. Can I be made bankrupt more than once? Yes, although serial bankruptcy is not recommended as it can quickly begin to look like fraud.15. How long do I stay bankrupt for? In general terms, you will receive an automatic discharge from bankruptcy 12 months after the date on which you were adjudged bankrupt, or sooner. This supposes that you will cooperate in every way with the Trustee, and that you have not been guilty of any criminal offense which has led to your bankruptcy.16. When I am bankrupt do I have to make regular or other payments to my Trustee? It depends. If you are earning a modest income or living on benefit, it is highly unlikely that you will have to make payments. If however, you are earning a substantial salary and you have a sufficient amount of disposable income, then your Trustee will expect you to contribute. The amount and frequency will be agreed with you. If you fail to agree, the Trustee can impose conditions on you, which if you do not comply with, may result in criminal proceedings against you.17. Can the Court take money from my wages? Whilst you are bankrupt, nobody can take money from your wages, apart from your Trustee with two notable exceptions. Firstly, any order that has been made in Matrimonial Proceedings for you to make regular payments to your spouse and/or children survives the bankruptcy and can be enforced during the bankruptcy, similarly, if you have been compelled to make payments as damages for Personal Injuries or fined by a court.18. Do I have to appear in person to be declared bankrupt? Generally speaking you do not have to appear in Court to be declared bankrupt, but you do have to attend the meeting with the Official Receiver. In certain circumstances, usually where criminal behaviour is involved, the Trustee can apply to the Court to have you publicly examined, and it is compulsory for you to attend the public examination. Also see answer to Question 60.19. Do I have to attend regular meetings after I have been declared bankrupt? Usually no. There will be an initial meeting with your Trustee and there may, depending on the nature of the debts that have caused your bankruptcy, be subsequent meetings, but they will not be frequent and the Trustee is unlikely to want to see you more than two or three times throughout the year of your bankruptcy.20. Who do I need to inform that I have been made bankrupt? Everyone that you owe money to and everyone who owes money to you. Generally the Official Receiver notifies these people. In addition, you need to notify any insurer who would pay out on the damage or destruction of any assets, bearing in mind you have to declare all your assets to the Trustee.21. Where would I have to go to be made bankrupt? IF you are making the application for bankruptcy yourself, then you go to the County Court for the area within which you live or work and make your application there. A few Courts do not have bankruptcy jurisdiction and will direct you to the Court for that area that does have bankruptcy jurisdiction. If one of your creditors is petitioning for your bankruptcy, then they are obliged to present the petition in the County Court having jurisdiction for the area in which you live and/or work or the High Courts of Justice in London.22. Do I have to inform people that I was a bankrupt and that I have been discharged? No, unless not to do so would amount to a misrepresentation. So, if on a credit application form there is a question as to whether you have ever been bankrupt, you would be obliged to say yes. If the question is not there, you are not obliged to answer.23. Who will know I have been made bankrupt? Very few people. When you have been made bankrupt, the petition is advertised generally, in a local paper, a trade paper if appropriate and the London Gazette. The London Gazette is an official publication which is read by all of the banks, building societies, and other financial institutions, and anybody who is particularly interest in the minutiae of the legal process. In addition, the fact of your bankruptcy is recorded in the County Court Judgements Register and therefore with the various credit reference agencies. A record is also placed at the Charges Registry, which can be searched by anybody (for a relatively small fee), to protect house purchase.Obviously the advertisements are at the very start of your bankruptcy. The County Court Judgement Register and therefore the Credit Reference Agencies hold the information for five years after your discharge and the Charges Register holds that information during the continuance of your bankruptcy. Other than that, unless you are a particularly notable person in your locality so that the newspapers may be interested, there is no general circulation of information.

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