In the last Quarterly survey carried out by the Insolvency Service, in excess of 30,000 individuals declared themselves bankrupt. This means that over 100,000 people a year are deciding to enter a process which will wipe their debt off and save in the case of a tiny minority of culpable bankrupts will mean that in 12 months or less they will be discharged from bankruptcy.
Many people are now realising that it is either not necessary or simply too difficult to try to maintain payments on a long term basis into an IVA or a debt management plan.
In other ways the English bankruptcy system is being used to their advantage by citizens of other EU countries, such as Ireland and Latvia. In England a bankruptcy is over in 12 months, in Ireland it will not be for 12 until you can apply for release from bankruptcy and even then only if you have paid all the fees and expenses and costs of the bankruptcy.
So How Do You Go Bankrupt?
Bankruptcy is started by filing a document known as a petition at the court nearest to where you have lived for the greater part of the previous six months. There are a number of issues arising here. Firstly, you need to check that the court nearest to you actually has jurisdiction for bankruptcy. If it does not the court staff will be able to do a simple check and indicate the appropriate court for you. Secondly you need to make sure that you are actually in one court jurisdiction for the greater part of six months proceeding the petition.
It is for this reason why anyone seeking to go bankrupt in England from any EU country should be resident for at least 3 months in England before they present a petition.
You must take your petition in triplicate along with a fee of £700 in cash to court on the day you are looking to go bankrupt. You may have to book an appointment in advance. Some courts such as Liverpool and Nottingham have waiting times of at least two weeks.
The final document that you need and the one which causes most people difficulty is the statement of affairs. This is 28 pages long and acts as a record of all your personal information. It contains details of all your creditors, both secured and unsecured and requires full addresses and account numbers. It is essential that the information is recorded correctly so that your creditors can be informed, and hopefully stop contacting you.
It contains details also of your assets and income. This is to enable the Official receiver to ascertain if you have any property which he can realise for your creditors, or if you have any spare income which you can make available each month. This is called an income payments agreement.
The statement of affairs is checked for completion by the court staff, not accuracy.
Once your paperwork has been checked, and your fee taken, you are taken to see a Judge.
The Judge is concerned with checking that you are taking an appropriate course of action, that you have had correct advice and that there is not a better alternative solution. Once he is satisfied on all these counts he will grant the order. From that moment you will be bankrupt for 12 months, or less if the Official Receiver applies for your early release.
Information provided by Steve Thatcher of Help With Debt (UK) Limited a total debt solutions company.
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