Bankruptcy has many disadvantages but it is over quickly – only a year. If you go bankrupt, your debts will be wiped out with only a few exceptions, the most common being student loans. It gives you a new start to rebuild your finances, an escape from an unmanageable debt situation.
This Guide to Bankruptcy provides information so you can:
- make the right decision about whether bankruptcy is your best option; and
- find out the real facts about what happens after you go bankrupt.
There is a lot of detail here – start by looking at the links in orange if you want an overview.
Contents
Concerns about going bankrupt
Bankruptcy – the Big Questions covers the most common worries that people have, such as will you lose your home? your car? your job? can you ever get a mortgage afterwards? who will be told that you have gone bankrupt?
Other worries you may have include:
- what types of debts are included?
- can you continue in business after bankruptcy if you are self-employed? Most people can, but contact Business Debtline for specialist advice about this.
- will my bankruptcy be approved?
- living abroad and want to go bankrupt?
- is it OK to spend backdated benefits before going bankrupt
- might you get a Bankruptcy Restriction Order (BRO)? Find out why a few people get a BRO and whether one would make much difference to you.
- do you have to tell the OR about all your expenditure? You may be asked questions about expenditure before you went bankrupt but don’t normally have to report on what you spend your money on after you go bankrupt.
- what might the Official Receiver take? looks at concerns about your possessions – most people don’t lose anything!
- what can the Official Receiver make you do? looks at concerns about being told how to live your life – might you be made to move, stopped from changing jobs? etc The answers are almost all “no”.
- is your pension safe in bankruptcy? for most people the answer is Yes your pension is safe.
- is a new partner’s house safe if you go bankrupt? yes – find out the facts.
Myths about bankruptcy
There is a lot of poor, incomplete or just plain wrong information around about bankruptcy on the internet and social media.
Much of this comes from people who will make money if you decide to choose an IVA instead of bankruptcy. Here are some examples of misleading or incomplete information.
One reader put off going bankrupt for a long while because she was worried by what she had heard. Here is her honest account of what it was really like for her: “Why I had to go bankrupt & how it went”.
Preparing for bankruptcy
The process of going bankrupt gives an overview, including what you will need to put on your bankruptcy application. For more details see:
- help with the high bankruptcy fees – this covers your options for getting the money together.
- how to pay the fees – this looks at the mechanics of how to pay them when you have the money. This can be done by instalments.
- how to fill in the online bankruptcy application – it’s long but it’s not difficult, so find out what information you will need.
- your bank account options – you may need to change bank accounts. This link is kept updated with a list of accounts that you are allowed to have when you are bankrupt.
- a checklist for the application process – knowing what you will need may make it all a bit easier.
After you go bankrupt
A Timeline for Bankruptcy shows what happens when.
What happens after you have gone bankrupt summarises when you will be discharged, what restrictions will apply before your discharge etc.
You will have an interview with the OR. This is usually over the phone but you can ask for a face-0to-face interview if you find the phone difficult. You may be interested in this account by a Debt Camel reader which goes into some details about her OR interview: “Why I had to go bankrupt & how it went”.
The Official Receiver will decide if you have enough surplus income to make monthly payments, this is called an Income Payments Agreement (IPA). Most people who go bankrupt do not have to make any payments. If you do, the payments will last for three years, but they are flexible so if your situation changes they can be reduced or increased.
Some more detailed articles:
- who should you tell after going bankrupt? – you don’t have to tell anyone, but sometimes it can be helpful if you do;
- what happens if you forgot to list a debt on your application? – it’s usually OK, the debt will be included in your bankruptcy anyway, but check the details;
- should you get a new job? Or work overtime? – possibly not if you have an IPA or you are undischarged.
- taxes and bankruptcy;
- repossession after bankruptcy – what you should, and should not, do if you want to hand back the keys;
- inheriting money when you are bankrupt;
- will the Official Receiver take your redundancy money?
When does your bankruptcy end?
Almost everyone is discharged from bankruptcy after a year:
What happens when you are discharged? This is the end of your bankruptcy and your debts in your bankruptcy are wiped out. the small number of people who have to make monthly payments will have to carry on making any IPA payments for the rest of the three year IPA period.
How to repair your credit record after bankruptcy The credit repair process can start a few months after you are discharged, but the bankruptcy marker will remain on your credit record until six years after you went bankrupt.
The alternatives to bankruptcy
Even if your debts are clearly impossible, you may still have other debt options::
- IVA or bankruptcy – IVAs were designed for people who can’t go bankrupt because of their jobs or who have assets to protect. They take longer than bankruptcy and will cost you more in monthly payments, but if there are reasons why bankruptcy won’t work for you, an IVA could be a good alternative;
- a long DMP or bankruptcy – bankruptcy lets you put your debt problems behind you, and it is often better than being stuck in debt management for a long while;
- a Debt Relief Order is better if you qualify – a DRO is cheaper, easier, and quicker than bankruptcy, so if you are renting and your debts are less than £30,000 see if you meet the other DRO criteria;
- selling the house it may be possible to keep your house after you go bankrupt if there is no equity or someone else can “buy” your share of the equity from the Official Receiver. But so think if it would be better to sell the house, especially if it is the wrong size, in the wrong place, your mortgage is interest-only or there is an expensive secured loan.
Even if you are sure bankruptcy is your best (or only) option, it is still good to take some advice about this, see Where to get help and advice for suggestions.
Is a creditor threatening bankruptcy?
This guide has assumed that you are deciding to go bankrupt. It is also possible for a creditor to make you bankrupt – this is rare but if you receive a Statutory Demand you cannot safely assume that your creditor is bluffing and ignore it. In particular, HMRC and local councils can and do make people bankrupt because of tax debts. If you have assets such as a house, if a creditor makes you bankrupt you may end up incurring tens of thousands of pounds of costs to get the bankruptcy annulled.
If you think a creditor is seriously threatening bankruptcy, or if you receive a Statutory Demand, you need legal advice fast – go to your local Citizens Advice, a local Law Centre or a solicitor who has experience of personal insolvency.
Don says
Hello Sara
I used my local authority pension pay out to start a new business in my retirement, I also ran up debts on credit cards and overdraft.
The business was going well, however I closed it without debt due to illness.
I managed to keep up with my payments, however the debt was still rising so I contacted C A, and requested help with a DRO application.
They advised me not to pay any creditors, also to wait for a old default to come off my credit file to help with the application.
My debts continued to grow whilst waiting due to charges from creditors, my initial debts was £18,000 however to to waiting months it soon passed 20k.
I believe the advise was incorrect and has now put me in a in a untenable situation, I have a new bank account which is in overdraft but cleared monthly, I don’t think bankruptcy will help and the stress will not help my medical conditions, am 72.
I am unable to get proper advice, I believe CA has caused this, I considered taking legal issue with them but I don’t believed I can as they are a registered charity.
I fear passing on and leaving my family in disgrace.
Sara (Debt Camel) says
I don’t understand what has happened here. It is never sensible to wait until a debt has dropped off a credit record before applying for a DRO.
I wonder if there was some other reason why a DRO at that time was not suitable for you – perhaps you had been paying some creditors and not others? It is usually better to have had several months of paying everyone the same – or not paying anyone anything – before submitting a DRO as it avoids problems about “preferring one creditor”.
I don’t know how long this waiting period was. A debt of 18k will not normally jump to over 20k in a few months unless you have been borrowing more or more debts came to light.
In practice there is very little difference between a DRO and bankruptcy for someone your age, as there is no question of your employment being affected. A DRO and bankruptcy have similar impacts on your credit record and your ability to borrow money in the future. A bankruptcy application is quite simple these days, there is no longer any need to go to court and Citizens Advice can help you with this.
But whatever happened has not been properly explained to you and it should have been, I suggest you go back to Citizens Advice and say you feel they gave you bad advice and ask for an explanation. If you are not happy with what you are told, tell them you want to make a formal complaint about this. And if you are not happy with the response to your complaint, you can take the complaint to the Financial Ombudsman – that is a consumer-friendly service where you do not need to employ a solicitor.
Don says
I paid everyone without preference, nor did I borrow anymore, I think from memory I was waiting for the old default to be illuminated for many months which I couldn’t understand., all my creditors kept adding fees and charges.
At least now I have a direction and will contact C A.
Thank you so much
Sooze says
My husband’s bankruptcy is due to end on 19/02/21. He has just received notification from an insurance company about an old personal pension plan he took out in 1988 and stopped paying into in 1993, however it has carried on getting dividends and is now worth a considerable sum. He had totally forgotten about this pension. The company had apparently been sending annual statements to a home we left 20 years ago and they have only now tracked him down! Does he need to tell the Official Receiver about this pension, and what will happen to it if he does?
His debts in the bankruptcy (all debts, he has no others) amount to £37,000, the pension is worth £55,000 apparently. He is 70.
Thanks in advance for any information.
Sara (Debt Camel) says
What other pensions did he have when his bankruptcy started – any personal pensions that he had not drawn any money from?
has an IPA been set – so he would have to make payments for 3 years to the Official Receiver?
Sooze says
He has 3 other small personal pensions that he’s been getting monthly payments from since he retired 4 years ago. No others.
No, one year only, no IPA.
Sara (Debt Camel) says
The OR has the power to have his bankruptcy cancelled (technical term is annulled) in some circumstances. But is this one of them?
The OR’s technical guidance (https://www.gov.uk/guidance/technical-guidance-for-official-receivers/57-pensions) says:
57.24 Where the bankrupt is aged 55 or over and holds an undrawn personal pension fund, the official receiver should obtain the current fund value… Where the pension fund value exceeds the total unsecured liabilities and, in a debtor’s application case, the bankrupt might have elected to draw the pension before applying for bankruptcy, official receivers are asked to consider whether the bankrupt met the insolvency test. Where they did not, the official receiver should consider making an application for annulment on the grounds that the order ought not to have been made.
and the gov.uk Insolvency Service Guide to Bankruptcy (https://www.gov.uk/government/publications/guide-to-bankruptcy/guide-to-bankruptcy) says in 5.3
‘If you are able to take money from your pension following changes to the law in April 2015, but have chosen not to do so, the trustee may look at the value of your available pension fund. If this would give you access to enough money to make a different arrangement to pay your creditors, the trustee can ask the court to cancel (annul) the bankruptcy.’
So four points
1) if he had put the pension on the bankruptcy application, would the bankruptcy have been approved? He would have had to pay fees and tax if he had withdrawn all this pension money. 25% of the55k would be tax free but the rest would be treated as income in that tax year. heu would presumably have had to pay 20% basic rate tax on most of it but depending on his other income (state pension and employers pensions) some may have been at 40% – see https://www.moneysavingexpert.com/banking/tax-rates/ which explains tax bands. So although 55k sounds a lot more than the 37k debts, in practice after fees (likely to be several thousand, possibly more) and tax this isn’t a lot more at all.
If his bankruptcy would have been approved if the pension had been put on the application form, then the OR will have no interest in annulling his bankruptcy.
2) He did not “abuse the protection given to pensions”. He did not choose not to withdraw the money – he was unaware of its existence.
3) he must inform the OR asap. He can do this by email. Attach the information you received from the pension co. Say he does not know what the fees and taxes would have been if he had withdrawn the pension but you think they could have been significant. Emphasise that he did not put the pension on your bankruptcy application as he was were unaware of it, so could not have chosen to withdraw the money to repay debts.
4) I suggest he should also contact your local Citizens Advice and ask for an appointment with a debt/money specialist to discuss this. Do not delay telling the OR for an appointment to be arranged. If the OR comes back and asks more questions, he wants to be able to take debt advice on this very fast. If the person at Citizens Advice isn’t familiar with the area, they can get help from the national Specialist Debt Advice Service (SDAS) that provides expert assistance to debt advisers. SDAS has recently helped with a large pension/Debt Relief Order enquiry and they would help with a case like his.
Sara (Debt Camel) says
I understand that the OR decided they were not interested in this old pension provided her husband did not draw any money from it before he was discharged.
All these cases are very individual – it you have a case a bit like this, do talk to your OR as soon as possible.
Jim says
Went br in 2011 and sold house by way of power off attorney
But there has been a problem with the sale contract so house might come back to me and the official receiver has shown a benificial interest as house price has doubled wondering what creditors would be paid as it’s been ten years also there a shortfall from another property is this written of in section 382 after 3 years
Sara (Debt Camel) says
I think you need to talk through the whole situation in detail with a debt adviser. I suggest you phone National Debtline on 0808 808 4000.
Much2Broke says
Hi guys
I need a quick bit of advice. I declared myself bankrupt in 2009 and as my home was in negative equity I was allowed to remain in it. The problem is now that I am on an interest only mortgage that will soon be coming to the end of the term and need to sell my property to be able to pay it off the balance. I know that a bankruptcy restriction has placed in the title register that prevents me from selling. So what I’m really trying to find out is what my options are if I can’t stay in the property and I can’t sell it.
Thanks.
Weatherman says
Hi there
If you go bankrupt but are in negative equity, the situation should be reviewed 2 years and 3 months after the bankruptcy order is made. If at that point the value of your share of the property after sale fees would be under £1,000, the property is normally transferred back to you (without restrictions).
So start by checking whether you still have any restrictions on selling the property – contact the Official Receiver to ask.
And what’s the situation now? Are you still in negative equity, or if you could sell the property would it clear the mortgage?
Janis says
Hello Sara,
I have a quick question for you.
Me and my wife went bankruptcy in September 2020.
We had shared ownership mortgage in place and secured loan against property.
The title of ownership has been passed to trustee.
But recently we had a letter from trustee that she is not interested in property due to lack of equity and she will remove her interest in property.
My question is:
If we will pay off secured loan in next 2 years, does trustee can claim interest in property due to rised equity?
I hope to hear from you soon.
Thank you very much.
Regards
Janis
Sara (Debt Camel) says
If the Trustee says they have no further interest in the property they are not going to change their mind. If you feel the letter is unclear, I suggest you ask the Trustee to clarify this.
Paul says
I am currently in over £70k of debt and have contacted stepchange to assist me with what to do next. They have suggested token payments for now until I decide on the route I want to take, either iva or bankrupt. My TV has just broken and I have the funds to buy one on a electrical store account but would cost me between 600 to 700. I see the purchase as a necessity but also am worried that I may get in trouble for doing so.
What advice would you give ?
Thanks
Sara (Debt Camel) says
Do you have assets to protect – is there a reason you are considering an IVA rather than bankruptcy?
How much do StepChange think you would pay per month in an IVA?
Kyle says
During a bankruptcy order, if I am awarded the mobility supplement to my War Disability Pension can it be used to get a car or will they take the extra income for an IPA?
Sara (Debt Camel) says
Have you already gone bankrupt or are you considering it?
Kyle says
Considering it, but very likely.
Sara (Debt Camel) says
First let me say how sorry I am that a veteran is in this situation.
I haven’t come across this situation before. In general disability payments are not taken for an IPA as you can claim an associated expense – in your case getting a car.
But it would be sensible to get that confirmed. And everyone should take proper debt advice before bankruptcy, not because bankruptcy is especially awful – it may well be the best option for you and it is often less trouble than people expect – but because it is very hard or impossible to reverse if it isn’t your best choice. So I suggest talking to National Debtline on 0808 808 4000.
If you will have problems getting the bankruptcy fee, do talk to SSAFA – they can sometimes help.
Kyle says
I have been putting off BR waiting for my assessment for WDP to be increased to include Mobility supplement. I will loose my car (on HP) and will be unable to replace it so am reliant on getting the mobility supplement. I never tried to claim it previously as didn’t require it as I could fund my own car, until my business failed last year and unfortunately some business debts were guaranteed by myself and passed to me. This is the reason for going BR. The stress of it all and currently trying to manage all my creditors is affecting my mental health and I worry if I postpone BR any longer I may fall too ill to work. I am the only income provider as my wife has severe ME and I have a 15 year old daughter with ASD, both rely on me not only to provide but for care too. My re-assessment is simply in queue and will be dealt with on first come first served basis and they cannot put a timescale on it, it could be weeks it could be months!! I am just concerned that if I go BR now then a month down the line I get the mobility supplement the OR may want that payment to be available to an IPA rather than me being able to get a car with it on the Motability scheme. My father in-law has kindly offered to insure me on his car and use as needed in the interim.
Sara (Debt Camel) says
That is very helpful of your father in law.
Can I suggest you talk to National Debtline for bankruptcy advice and ask them about this? Getting the mobilty supplement may not be a problem at all, I am just saying I have not come across a case like this.
D j Cooke says
Hello. I have been declared bankrupt and received a call from the or who then pencilled me in for another phone call to which he seemed satisfied. He also emailed me and at the end wrote send me this and hopefully you can start to move on from this. I’ve checked my application and can see they have written to my creditor stating unlikely no money will be made to them
Judging from the above and I know they can contact me anytime would you say from your experiences this could be the end of communication with the or I obviously know if my circumstance change I will contact them. Only asking as I suffer from nerves and hopefully can try move on. My application was accepted nearly a month ago
Sara (Debt Camel) says
I guess you may be worried about having to make monthly payments?
The fact they have told a creditor they are unlikely to get anything doesn’t really help you be sure, as the OR would take their own fees – several thousand pounds – out first from any payments you make.
But it doesn’t sound as though the OR is going to be back in touch again, so I suggest you try to relax. It is common for people to never hear any more from this point.
Michael says
Do I need to know the exact addresses of my bankruptcy creditors? This is quite confusing. For example, American Express has several addresses in UK, which should I choose? Does it matter? American Express transferred my debt to another company and now she sends me reminders, who should I enter?
Sara (Debt Camel) says
It doesn’t matter if you get the wrong address.
If your debt has been “sold” then you should list this as a debt owing to the new creditor – but if you list it as Amex by mistake, this doesn’t matter. If Amex is just using a debt collector to try to get you to pay, then Amex still own the debt and they are the creditor.
Kyle says
Hi Sara,
Not submitted BR yet. I have another question. Currently I pay a 20% contibution of my gross income at source into my workplace pension, the maximum it allows for. I assume this would be deemed by the OR as an excessive overpayment, what is considered acceptable as a percentage for employee contributions into a work place pension and what should it be reduced to?
Sara (Debt Camel) says
Can I ask how large your debts are?
And what your income from work is?
Kyle says
Hi Sara,
Over 200k in debts, most from personally guaranteed business debt from failed business. Current gross income is 95k through PAYE.
Sara (Debt Camel) says
Talk to National Debtline then – about bankruptcy in general and this pension issue.
Claire says
Hi Sarah, I have a couple of questions please.
I have filled in my bankruptcy forms and paid but I have pending payments on my bank account, one of which is the final payment for my bankruptcy fee. Will this still go through if I submit my bankruptcy application?
I am on benefits as I’m a full time carer for my ASC adult children. They both get PIP in their own right, but the bankruptcy form asked for their income details. Will they have to pay towards my bankruptcy?.
Step change have advised the bankruptcy, but I kind of feel that there is no further support now that decision has been taken.
I’m currently feeling terrified about pressing that ‘submit application button
Sara (Debt Camel) says
Does the bankruptcy application say that you have paid? See https://debtcamel.co.uk/pay-bankruptcy-fees/. You should not be able to submit it until they have received your fee.
As I said before, if your only income is state benefits, you will not be asked to make monthly payments. And your adult children certainly won’t be!
I asked you before if there was a reason StepChange recommended bankruptcy rather than a debt relief order?
Lisa says
Hi Sara
My husband moved out of our family home due to personal reasons, whilst being away he has managed to rake up almost £30,000 in credit card debt as well as over £20,000 to friends and family. He has been away and has managed to sort his personal problems out but can not return home due to all this debt he now has, we simply do not have any extra income to pay these debts off whilst living together
I have now had to claim universal credit as a single parent along side my full time job. I rent and own my own car around £6000 which is all in my name. He wants to declare bankruptcy do you think this would be the best option for him so he can return home?
He earns around £2000 a month and would be able to make decent payment if he continued to live with his parents but he would only be able to make a small payment each month if he moved back home leaving us with nothing basically
What I really need to know is can he declare bankruptcy whilst still living with his parents and being able to afford some sort of repayment towards his debt or would he have to move back home to prove we couldn’t afford to repay this debt whilst living together
I really want to get my family back together but this huge amount of debt is keeping us apart and isn’t helping his mental health right now
Sorry for the long post
Sara (Debt Camel) says
From what you say, bankruptcy may well be a sensible option for him if he returns to live with you. I can’t say it is his best option or his only option because that would be irresponsible – he needs to talk though his situation in detail with a debt adviser, me making a guess is not good enough. I suggest he phones National Debtline on 0808 808 4000.
National Debtline can talk about timing. You don’t have to be unable to make any payment to your debts in order to go bankrupt so it may be possible for him to go bankrupt at his parents and then return to live with you.
But equally he doesn’t have to go bankrupt before returning to live with you. As soon as he moves back, your benefits would be affected so he would have to be paying all the rent and bills, so he would have to massively reduce or stop the payments to his debts. And then he can go bankrupt. It would help, if he has enough money to pay the bankruptcy fee.
I would suggest it is generally more important to live where you want to and then sort out the resulting financial problems, especially if your mental health is affected.
Lisa says
Hi
Thank you for the reply. I’m going to be honest here with you what if the 30k credit card debt was through an addiction would he still be able to go bankrupt?
He’s been to rehab recently and is now trying to rebuild his life over again but obviously all this debt and stress isn’t helping.
Also the 20k debt is actually owed to a dealer who obviously wants his money back how can we explain that a large portion of his wage now actually goes to them until it’s cleared
I appreciate it’s a messed up situation but it’s ours at the moment and I’m just trying to help my husband get his life back to normal
Thanks
Sara (Debt Camel) says
Yes he can still go bankrupt. It is possible he might get a Bankruptcy Restriction Order, see https://debtcamel.co.uk/bankruptcy-restriction-order-bro/ but many people decide that won’t make any real difference to their lives.
Do you mean he wants to carry on repaying the dealer? That won’t be possible – it isn’t an “allowable expense” in bankruptcy. I think he needs to talk through his options – eg (there may be others) go bankrupt and tell the dealer he wont be repaying, or repay first then go bankrupt, or repay and not need to go bankrupt as his other debts are quite small.
Lisa says
He doesn’t want to pay them he has to. It isn’t an option not to pay them I don’t think they would care weather he is bankrupt or not unfortunately. Thank you for the advice
Sara B says
I have contacted national debt line and completed a very basic budget. It has worked out that I have £300 “spare” each month. I am not sure if this budget is completely comprehensive but it has said all of the remaining should be offered to the debtors. Is this something I will be made to do or can I still go bankrupt with this approx amount “spare” each month. I have no assets and did not want to take on an IVA thank you
Also can a bankruptcy be refused? TIA
Sara (Debt Camel) says
Did you talk through your income & expenditure or just complete an online I&E form?
You said before that you usually have less than £100 a month left and you haven’t been making payments to your debts. Are you clear where all your extra money is going that hasn’t been recorded in the I&E form which says you have £300 left?
Bankruptcy can be refused, see https://debtcamel.co.uk/can-i-go-bankrupt/. But not just because you have a £300 spare or you could have an IVA instead. With no assets to protect it is usually much more sensible to go bankrupt than opt for an IVA.
daniel smith says
Hi Sara,
I am a self-employed sole trader and will be going bankrupt on 25th May due to being petitioned by one of my creditors. I am expecting an ARG (Additional Restrictions Grant) payment before then and my question is how will this money be treated by the OR? I fully intend to continue trading as long as I am able to keep the van which has more left on the finance than it’s worth. Will the grant money be taken by the OR or will I be able to use it to carry on with my business? There are vital repairs needed to the van but I don’t want to spend anything until I understand how the OR will view this situation. I have tried to find answers through the people who administer the grants at the local council but haven’t been able to get any advice despite leaving messages and writing emails. I’m not sure what to do, any advice appreciated.
Many thanks,
Dan.
Sara (Debt Camel) says
I suggest you talk to https://www.businessdebtline.org/ about your business, this grant and the threat of bankruptcy.
James says
Hi Sara
I’m considering bankruptcy.
I am 4 months into a 12 month tenancy agreement abs have paid all the rent up front to the landlord. Will the receiver try and evict me and claim the rent towards costs?
Many thanks
James
Sara (Debt Camel) says
why did you pay all the rent in advance? Is your landlord a commercial landlord or any connection to you? Is the rent standard for your area?
Are you in work? How much income do you have spare each month while you are not paying rent for the rest of the year?
James says
Thank you for the speedy response
The landlord is a residential landlord and I paid the rent out of the last of my savings. I’m currently on universal credit so they insisted upon this.
All I have now is the benefits I receive which do not cover my outgoings
Thank you
Sara (Debt Camel) says
well it’s an unusual situation.
I am not sure how the OR would view it, but I am not sure how the OR could “evict” you or even if that happened you would get any rent back from the landlord anyway.
You may be fine, but I suggest you talk to National Debline on 0808 808 4000 about this and about bankruptcy in general.
Trixi says
Can you offer a guide to bankruptcy for Scotland please.
Sara (Debt Camel) says
See this blog by a Scottish debt advisor: https://www.advicescotland.com/home/sequestration/
Steven says
If I am still under undischarged bankruptcy I must notify the “Adjudicator Office.”
Insolvency Service “about the change of the address of residence? And will they also notify all creditors about this fact? Please reply and thank you.
Sara (Debt Camel) says
Yes you should tell the OR’s office that you have moved. So far as i know, they do not inform your creditors – do you care if they do?
Steven says
No, I don’t care, I was just wondering. Thank you very much for your answer.
Chris says
Hi, I’m in the process of going bankrupt, just need to pay the fee. I have 3 bank accounts, my current 1 which has an overdraft, a savings one which will have just about enough savings to pay the fee and a new basic one I have set up. Do I have to declare the basic one as I would like to use this after bankruptcy. Also how long does it normally take to be able to use a bank account after bankruptcy as I obviously have bills and will need somewhere for my wages.
Sara (Debt Camel) says
Yes you have to declare the new basic bank account.
The bank may decide to close it. If they do, you will need to open another one – it’s a good job there are now a lot of these bank accounts to choose from (see https://debtcamel.co.uk/bank-accounts-after-bankruptcy/).
It is usually best to try to time your bankruptcy application so it is just after you have been paid and your main bills have been paid. Then you can take cash out so you aren’t short while the account is frozen – this is normally only for a few days. And have some time to get your wages transferred into the new basic bank account.
Have you taken advice on going bankrupt? Even if you think this is clearly your best option – or your only option – it is ALWAYS worth the time to talk to a good debt adviser about it. I suggest you phone National Debtline on 0808 808 4000. they can also talk to you about the timing of bankruptcy and your bank account concerns.
Katie says
Hi Sara,
Myself and my husband have just recently been declared bankrupt, unfortunately it was our last resort & could see no other way out. Another stickler for us is that we’ve had our house for 14 years on an interest only mortgage & not paid a penny off it. It went into negative equity after only 6 months of owning it, so we have never been able to move to a repayment. My question is, would we be able to just hand the keys over to the lender & walk away without paying any shortfall etc? We just want to move forward & start fresh with our lives. The house has brought us nothing but misery & pain, just feels like we’re under this dark cloud every day. We both suffer with mental health because of it. Any tips/advice would be greatly appreciated.
P.s Our mortgage is with Santander so unsure of how they deal with things like this.
Thank you
Sara (Debt Camel) says
would we be able to just hand the keys over to the lender & walk away without paying any shortfall etc?
Yes. The mortgage is a debt that us included in your bankruptcy. Where a house has significant negative equity and you want to move this may well be a sensible option for you.
I do suggest you talk to a debt adviser about this – if yoh didn’t take advice before bankruptcy I suggest you phone National Debtline on 0808 808 4000. They can talk about the timing of this and where you will Be moving too.
Jay says
Hi,
I applied for bankruptcy last june and one by one all lenders stopped calling me all except HSBC, they constantly call me on a daily basis (which i have stopped answering), telling me that im in arrears and need to make payment. The first time i answered the calls i explained the situation giving them the bankruptcy reference number and official reciever contact details, did this on several calls. But they still havent stopped trying to call me a year on. Any advice on how to deal with them ?
Thanks
Sara (Debt Camel) says
That’s unusual. I suggest you send them a complaint in writing – email is fine.
swa says
I have recently applied for bankruptcy. I was made bankrupt the following day. Then waited for the official receiver to contact me and arrange an interview. But after 5 days I received an email from the official receiver stating that no interview is required and send three forms in an email to sign and email them back. , and I signed and email them. Since then till now it is almost two months and I have not heard back from them.
Just wanted to know what is the next step? Not getting an interview call from official Receiver is it OK?
Thanks
Sara (Debt Camel) says
What were the three forms you completed?
My guess is that you have no assets and either aren’t working or have a low income?
swa says
These three form
I) DPADA
II) NTB2
III) TNIDIS
Yea I have not assets and low income.
Pls guide what is the further process?
Sara (Debt Camel) says
Those are normal forms for people to be sent.
NTB2 – notice setting out the duties and responsibilities of an undischarged bankrupt;
TNIDIS – tax and national insurance disclosure form;
DPADA – Data protection act disclosure authority
The OR has decided that an interview is not needed because no additional essential information or investigation is required, all necessary recommendations can be made and instructions given without contacting the bankrupt; and the reason for your bankrup[tcy was fully explained in your application.
the statement of affairs.
You still have to tell the OR if anything changes in your situation (as the NBT2 form set out).
It may well be that you are not contacted again and that no IPA will be set.
John says
Hi Sara,
I became bankrupt in Feb, so 8 months remaining until discharge. A couple of questions if I may. I want to change energy supplier as the new rate they’ve offered is sky high:
1. I’m I able to take out new direct debit with a new supplier (or direct debit for anything else)?
2. If I can, do I have to inform the creditor that I’m bankrupt, as the annual bill will be over £500?
I’ve search many websites for the answer, but to no avail.
Thanks as always…
Sara (Debt Camel) says
There is no reason why someone who hasn’t yet been discharged from bankruptcy cannot set up a direct debit.
Can I ask if you are paying an IPA?
John says
No IPA set up – I’ve been contacted and assessed.
Sara (Debt Camel) says
so you said earlier you thought you were close to an IPA. If you are (I can’t tell if that is accurate obviously) then it may not make sense to try to get you utility bills reduced until after you have been discharged.
John says
Ah yes, I did previously an IPA for me it was touch and go if I had one set up (but luckily one wasn’t). I take your point about reduced bills, presumably I would have to inform the OR of the reduced bill and then run the risk of an IPA being set up. I’ll stick where I am.
Thanks again
Kelly says
Hi
I was discharged from my bankruptcy in March this year. I have three bank accounts – my Lloyds account I didn’t mention as I don’t use it and there wasn’t any money in there.
So my son who is also rubbish with money got his student maintenance loan put £3000 into my Lloyds account until this week when he wanted me to transfer some to him.
I go to do this and I’m told I’m not allowed as the account is blocked and they need permission to release the money to me.
I never received a letter or anything saying the account is blocked or closed, I’ve still received statements from them online, the money has been in the account for a month now.
I feel sick with worry as it isn’t my money it’s my sons maintenance loan and he needs it – if the account is blocked or closed isn’t it weird how the money was allowed to be transferred in and didn’t bounce back to my son.
Do you think they will keep it?
Sara (Debt Camel) says
Are you making any monthly payments to your bankruptcy?
Paul says
I transferred my share of home to my wife in 2019 after I had an affair and felt it was the right thing to do after what I had put her and our 2 children through. At the time there was probably about £15-20k of equity.
I filed for bankruptcy in May 2020 due to my business failing and I had personally signed two business loans as guarantee. The company debts in total where £320k.
Ive now received a letter from Mazars saying they’re looking into the transfer of the property in order to realise the value and possibly transfer it back into my name.
My wife and I aren’t divorced, but since 2019 she’s borrowed money from her parents, paid off the help to buy loan on the house and also converted the garage which I’m sure has now increased the value.
We have 2 children aged 10 and 12, from what I’m reading online it’s looking like my Wife is going to have to buy interest. Can we delay this for 12 months so she can save up money? What happens with the fact that she’s now paid off house loan with her parents money etc?
Does the value of the house go from when I transferred back in 2019 or as it is now?
I’m concerned that my share with her all updates could now now be £50k+. Can i save up over 12 months and lend her the money?
Sara (Debt Camel) says
Did you take debt advice before you went bankrupt?
At the point where you transferred the house to your wife, was your business in a good financial position?
Paul says
Yes i did take debt advice.
No the business wasn’t in a good financial position when the house was transferred.
Sara (Debt Camel) says
Then I suggest you go back to the debt adviser you took advice from as they know the full circumstances of your situation which will help in decide what to do next,
Kyle says
Hi Sara, I was declared bankrupt on 04/07/2021 and my tax code has still not been set to NT, do you know how long HMRC take to do this? I am still paying income tax!!
Sara (Debt Camel) says
oh it can take a couple of months. It doesn’t matter to you, as soon as your tax drops, you will have to pay the tax to the OR. You are no better or worse off because of the delay.
Kyle says
As it stands we are having to be helped financially by family as our income is currently £300pcm below what we need for essential living expenses. Would the OR allow some of that tax saved to be used to help us with our living expenses rather than relying on family for the shortfall for the remaining 10 months of our BR?
Sara (Debt Camel) says
Is this because of the car finance or has the car been handed back? Have you talked to a debt adviser about this as a £300 negative budget is very high, what options do you have to reduce it.
I would be surprised if the OR will allow you to keep sone of the tax money, you can ask but if isn’t set after considering what you can afford, in the same way that income tax isn’t set that way – this is effectively a transfer of money between two different government departments, nothing to do with your finances.
Kyle says
Hi Sara,
Car has gone back, father-in-law bought a car for us to use. It is due mainly to high private rent and massive reduction on income on my part, which should improve in April 2022. The only option to reduce the deficit would be to move into a cheaper rental property but we are tied into a contract and Landlord knows of the BR and is happy as long as rent is paid, and we would find it extremely difficult to find somewhere else while going through BR. The issue is likely not be a long term one as income may increase shortly after BR is discharged. My impression was that the NT code was set due to HMRC being a creditor like any other. Surely if the money saved with an NT code is required to maintain living expenses it should be? I was under the impression no creditor should be treated any differently than another, therefore why would the OR then simply hand that money back to HMRC ignoring other creditors in the process? Is that not hypocritical of them?
Sara (Debt Camel) says
The NT tax code has nothing to do with HMRC being a creditor – tax collected through PAYE is on your current income, not a debt at the start of your bankruptcy. It is just a way the Insolvency Service funds its operations.
Can you not increase your income now a bit to reduce the deficit each month?
kyle says
I see, so the tax not paid to HMRC doesn’t go back to them but funds the Insolvency Service, now I understand. The hours with my client just are not available at the moment. We’ll muddle through.
CJ says
Hello. Just wondering whether you are allowed to enter into a SIP (employer share incentive plan) either prior to discharge from BR or after. I do pay into an income payment agreement and this will run for a couple of years after the discharge. The money will be locked in for 5 years, but thought may help me get back on feet after the discharge. Just not sure if it’s allowed.
Many thanks
Sara (Debt Camel) says
I don’t think this would be seen as an allowable expense.
Jay says
Hi Sara. It’s time for me to wipe the slate clean, I have debt for loans and credit cards that I want to clear, but also owe a mortgage debt which is over 6 years old making my entire debt well above £30000, would bankruptcy be my only option, I’m out of work and not paying anything towards debt, live in rented accommodation and do not own a car.
If I start a job during the bankruptcy if that’s the way I go, how will this affect me?
Thanks
Jay.
Sara (Debt Camel) says
Bankruptcy may be your best or indeed your only insolvency option but you need to talk about your full situation to a debt adviser first. It is always worth the time to do this, there may be something unusual that makes bankruptcy difficult for you or which you need to know about before decide to go ahead – talk to National Debtline on 0808 898 4000.
Re getting a job, this is a popular question at the moment and I will be publishing an article on it this week!
Sara (Debt Camel) says
See https://debtcamel.co.uk/bankruptcy-new-job-overtime/ which looks at getting a new job
Carol says
HI Sara,
I have £35,000 worth of loans and credit card debts which I have built up over the years. My debts are all in my name. My partner went bankrupt last year due to Covid and closed his company. He has been discharged from his bankruptcy this September. We have two children and our total outgoings are around £2200 per month. My partner isn’t currently working but I am and bring home about £1500 per month with Universal credit of around £600 p/m. I understand the process for bankruptcy and calculate that I wont be making any payments towards the bankruptcy, whilst I am the only earner in the household. What I don’t understand is, if my partner obtains a job after I have been made bankrupt but before I am discharged, do I need to notify them and if so, would they then ask for 3 years of payments. His mental health really suffered due to the Bankruptcy and loosing his company, but he is starting to get better, so is looking at a temporary job. I just want to understand the process, so we are prepared for any contributions we may be asked to make and how long the duration would be.
Many thanks
Sara (Debt Camel) says
Even though you are familiar with bankruptcy, you should still talk to a debt adviser about this – I suggest you talk to National Debtline on 0808 808 4000.
if my partner obtains a job after I have been made bankrupt but before I am discharged, do I need to notify them and if so, would they then ask for 3 years of payments
That depends a lot on your budget and how much he would be earning. Your OR would expect him to contribute to the household expenses in proportion to your incomes. And of course you would be likely to lose most or all of the UC you are currently getting – you can use a benefit calculator such as https://benefits-calculator-2.turn2us.org.uk/ to see how your benefits would change.
If you did have to start making payments, then they would be for 3 years.
In similar situations some people decide it’s best for the other person not to get a job, or only get a part time one. Or for you to reduce your hours if that is possible. After you too are discharged, no IPA can be set.
Debbi says
Hi Sara, Hope your OK. I have filled in my application to be bankrupt and inc family, i have debts of over £45k and i have -£850 each month after being paid. I get paid on Friday 26th Nov, when i am paid i will pay the £680 fee’s from that then fully submit my application. When i get paid am i then allowed to pay all of the priority bills for December – Council Tax, Car Tax, Car Insurance, electric, food etc? I know they freeze bank accounts, but i am wondering if it is OK to pay off the things i need to with my wages prior to that? Also, what is the time frame for freezing accounts please from the time you apply to be bankrupt, is it done as soon as you are accepted? I have been terrible with my money and borrowing, so i am expecting a BRO when it all goes through, but can i get in further trouble? Due to anxiety and depression, I have just been a very stupid person – I have taken out many contracts with O2 for example and i sold the phones to get funds to pay for bills etc at the time of doing so – I know you aren’t supposed to sell any items while still under contract but i had no choice, and its something i have been doing for 10 years, i had such bad credit yet they would continue to give me contracts, so i treated them like loans in a way to get funds.
This is the last thing i ever wanted to do, i genuinely feel guilty about doing it and not paying people / companies the money i owe. Thank you.
Sara (Debt Camel) says
i have -£850 each month after being paid.
is this after paying your debts?
Have you looked at opening a new bank account after you go bankrupt? How much is your car worth?
Have you talked to a debt adviser about bankruptcy – I am not saying it isn’t right for you but however obvious you may think it is, it is always worth talking to an adviser first. The more anxious you are, the more important this is. If you haven’t, I suggest you phone National Debtline on 0808 808 4000 – start you conversation by saying that you suffer from anxiety and depression.
I wouldn’t feel guilty about going bankrupt – the lenders are commercial firms that aimed to make a profit out of you. Take O2… it could have checked and realised that you were taking an unusually large number o contracts, but instead it just kept on lending.
Debbi says
Hi Sara, thank you for getting back to me.
-£850 is after paying as many debts and priority bills as I can yes, I would still be £850 short as I just owe too much out.
I no longer have a car registered to my name, it’s in my partners, I work from home and he is a courier, I was never using it but I still need insurance for when I visit family or nip to the shop.
I filled in all my info on step change and bankruptcy was the suggestion along with an IVA.
I opened a new bank account two weeks ago with Nationwide, the Flex basic and made them aware of my plans to be safe yesterday – My wages will be going in to there as of next week.
I appreciate that thank you.
Sara (Debt Camel) says
I am not a great fan of StepChange’s “online debt advice” – especially when it comes to bankruptcy. This may well be right for you. I don’t think you should let concerns about an BRO dissuade you. And if you have no assets to protect, bankruptcy is almost always much better than an IVA, But I do think you should TALK to a debt adviser about this first. Do yourself a favour and phone National Debtline.
I no longer have a car registered to my name, it’s in my partners
I just want to check that you didn’t buy this car originally?
To answer your question, yes you can pay all the priority bills from this months wages – anything you will be carrying on paying. But no payments to any debts that will be included in your bankruptcy. National Debtline can run through this with you. It can sometimes take a few days for accounts to be frozen.
Debbi says
Thanks Sara.
3 years ago we both purchased the car together in cash that his Nan gave us, but we just happened to place it in my name for ease at the time – I placed it in his name last month once again for ease as there was just no reason it being in mine and I’m sorry to be morbid, but if I chose another direction because of all of this, I didn’t want him to run in to any problems as it is his car technically and he uses it 6 days a week for work. I know I’m likely to get a bro because of this action too but at the time I wasn’t thinking of bankruptcy sadly.
FYI – The car is a 2012 Vauxhall Astra with 80,000 miles on it, nothing fancy by any means.
Sara (Debt Camel) says
do you know how much the car is worth? I really think you need to talk to National Debtline about this. It may not be a problem but you need to know.
Debbi says
I am currently on to live help now discussing a few things but I’ve gotten really anxious and worried again now. I’ve done some googling and I’d day it’s worth about 2,500. He needs a decent car for his work, he is a courier 6 days a week – Even though he is now the registered keeper, can I foresee problems with this please? It’s the one thing I didn’t want to happen :(
Sara (Debt Camel) says
if the money came from his Nan, not your savings, and you can show that from bank statements it may be fine. But you need debt advice on this.
The registered keeper isn’t the main issue. Say you bought a lovely new Mercedes convertible for cash a year ago and transferred it into his name last month – the Official Receiver would quite rightly think that isn’t fair and would want the car sold.
john says
Hi Sara,
I have 6 months to until my bankruptcy is finished. I have a small pension pot that I could have claimed at the time but I didn’t want to (and why would I just to give it to the OR). When my bankruptcy ends in 6 months, can I immediately claim my pension without any risk of being taken off me/declaring it to the OR? I do not have an IPA set up. Initially I did not intend to claim the pension anytime soon but I really do need that money due to personal circumstances. The lump sum of the pension is £10K and circa £1.5K per year.
Sara (Debt Camel) says
From what you have said, that sounds as though it will be fine to take the pension after you are discharged if no IPA has been set. This post https://debtcamel.co.uk/pension-safe-bankrupt/ runs through all the different calculations.
If you are in receipt of any benefits, you will want to take advice on the effect on them though – talk to your local Citizens Advice.
John says
Many thanks for you’re reply Sara.
Will I be automatically be discharged from bankruptcy a year to day I was declared bankrupt, so effectively I can claim pension then? I would like to start the ball-rolling to claim my pension as early as possible. As it takes around a month to process, is there anything wrong with requesting my pension a few weeks before my bankruptcy ends, with the aim for it to hit my account after my bankruptcy ends? My concern with what I’ve proposed is it might raise a red flag to HMRC or the OR when the pension provider starts doing the tax calculations before my bankruptcy ends. Or am I thinking too much!!
Sara (Debt Camel) says
Discharge is automatic for almost everyone and you should know if there may be a problem, see https://debtcamel.co.uk/discharged-from-bankruptcy/
But this is a VERY bad thing to get wrong. I have never heard of HMRC choosing to to not discharge someone because they intend to take a pension but I don’t think you should take even the slightest risk. I would wait until you are discharged before starting the process.
John says
Thanks again Sara. I’ll take your advice and hold off, as you said, it ain’t worth the risk.
Thanks gain…
Sara (Debt Camel) says
I repeat my suggestion to talk to Citizens Advice about benefits – if you really need this money and aren’t getting benefits perhaps you should be. If you are getting benefits you need to know what the effect on those benefits will be.
Kim says
Hi Sara
Have been considering bankruptcy for some time (debts from previous relationship) and finally got everything together and saved half bankruptcy fee. In the summer my ex came into some money and said he’d help me and not to go down the bankruptcy route. I still have 2 children at home and both working like myself. All household bills are being g paid us rent but nothing has been paid put yo anyone else as cant afford too and as ex was going to help havnt written to any creditor in some time, just telephone conversations. It’s now nearly Christmas and guess what no help from my ex!
Now just going ahead with it but will this go against me as have hung on from doing it for so long?
Kind regards,
K
Sara (Debt Camel) says
Can I ask how much you currently owe, roughly?
Have you had advice on bankruptcy? It may seem like your best, or indeed only, solution and you may well be right! But it is always worth an hour of your time to talk it through with a good debt adviser. If you haven’t, phone National Debtline on 0808 808 4000.
will this go against me as have hung on from doing it for so long?
No, not unless you have been borrowing a lot more in the last few months or you have been repaying debts to family say and not to other creditors.
Jen says
I am currently going through the ombudsman with regards to my mortgage provider stopping credit file updating for a mortgage that existed at my point of bankruptcy in 2017, I have since been discharged in 2018. I have had my first big blow with regards to my complaint today.
The ombudsman has sided with Santander quoting the below with regards to a letter from the OR on 2017. I have managed to navigate the secured / bankruptcy minefield quite well so far however this response has stretched my understanding. Is anyone able to explain it in layman’s terms for me please?
“This letter also confirmed the mortgage interest is a deductible expense, as such would removed before collection of Miss Kendricks share of the profit.
The letter goes on to say Miss Kendrick’s beneficial interest compromises of her interest in any proceeds of sale after the satisfaction of any registered charges against the property and sale costs, and Miss Kendrick’s share of any profits from the tenancy agreement.
This letter from the official receiver makes it clear that the mortgage interest is a deductible expense therefore indicates liability towards the mortgage payments. If there was no liability then the official receiver could collect the full share of rent, but this letter confirms otherwise. “
Sara (Debt Camel) says
what has happened to the house and to the mortgage?
Jen says
The mortgage is joint. The other account holder has continued to maintain the payments as far as I am aware, we have no contact
Sara (Debt Camel) says
so the problem is that the mortgage is still reported on your credit record?
Jen says
Yes it’s just the recording I’m trying to stop. I understand the debt will still exist.
I have asked for a backdated default with the debt showing as partially settled.
The ombudsman (case reviewer not an actual ombudsman yet) is claiming the letter from the OR in 2017 means they should still record to my credit file. I think this is not the case but don’t know enough to confidently say if it is or isn’t
Sara (Debt Camel) says
I suggest you go back to your OR and ask for a letter which confirms that from the date of your discharge you have no liability for this mortgage at all. And then send that to the ombudsman.
Jen says
I have already provided this to the ombudsman but they seem adamant the letter quoted above overrides that. I’m hoping having an actual ombudsman review my case may help. Thanks for your help
Jill says
Hello – my husband and I have had our bankruptcy approved today. We have a basic current account with HSBC that we opened 2 years ago when we started a Debt Repayment Plan. We don’t owe HSBC any money and there is no money in there. We only use it for bills. I was wondering if it will definately be frozen and if it was going to be frozen would it have happened today? I’m an agency worker and get paid weekly so am keen to know so that I can arrange a new account if necessary for my wages.
Sara (Debt Camel) says
I’m sorry but you need to ask HSBC this.