Filing for bankruptcy is an option that is now being taken more often by those in debt here in the UK and also as an option by those in the EU who move to the UK and establish there centre of main interest here.
The latest figures released by the Insolvency Service show that over 30,000 in the last quarter declared bankruptcy in England and Wales. This is a slight increase on the previous quarter, and I see this as a worrying development, as the economy has been pretty stable for the last couple of years. I suspect that the numbers of people still coming through the system and actually increasing is a result if two factors.
Firstly I suspect that people have been trying to manage their debts via debt management schemes and have actually realised that they are just treading water and not making a dent into their liabilities, and : secondly I suspect that there has been a slight increase in EU citizens who have now established their COMI here, actually going through the process.
Step 1
Bankruptcy is undertaken by firstly establishing the court in which you need to start the bankruptcy process. You can do this by checking online or in your Yellow pages for the nearest court to where you live. This is most often in your nearest big town. A call to that County Court will clarify if that is the correct court. If not they will tell you which is. You need to ascertain from the court whether you need to book in your bankruptcy appointment and if so when, or if you can simply turn up when you wish. This is very important as each court maintains its own procedure.
Step 2
You need to obtain a bankruptcy pack. This can be from that local court or you can download them from the Insolvency Service website. I can also provide you with them.
Step 3
You must complete the Petition, which is three pages long and the Statement of Affairs, which is 28 pages long. The statement requires you to provide details of your income and expenditure, and your assets, such as a home, a vehicle and pension, and liabilities.
It is important that you complete the statement in as much detail as possible. The Official Receiver bases any income payments agreement with you, upon this statement. The statement of affairs also sets out your creditors addresses, which the OR uses as correspondence points, so the creditors can be informed and updated on the progress of the bankruptcy.
You will be expected to set out in full your responses. It will also be expected that those responses are truthful.
Step 4
You must attend at court at the time of your appointment, or if no appointment at a time of your choosing. You need to bring with you 3 copies of both the Petition and the Statement of Affairs. Copy this yourself as the court will charge you heavily if they have to do it for you.
You will also need £700 in cash, if you do not qualify for a reduced fee. There are certain circumstances in which you need pay a fee of £525, and these are set out on Court form EX160.
The court clerks process your papers, take your fee and then you wait to see the Judge.
Step 5
You are taken to see the District Judge. He will read your papers and check that you are certain you are taking the right decision. He will want to be assured that you have taken proper advice. He may also check that you have a right to apply for bankruptcy, by establishing that your centre of main interest is in England.
If he is satisfied he will make the Bankruptcy Order.
At that moment you will be bankrupt for 12 months, unless released earlier.
Step 6
Your case will be transferred to the Official Receiver, who will contact you and conduct an interview. This interview is based upon your statement which is why it is so important to get it right first time. If you need help completing your 28 page statement contact an insolvency professional such as myself.
If the Official Receiver is satisfied that there is no investigation to be carried out, or any distribution to be made he will often seek authority from the creditors to release you from bankruptcy early.
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