It’s an important fact that you need to be aware of if you are considering bankruptcy as a possible solution to your debt problems. Depending on where you live in the UK the criteria, rules and legislation for bankruptcy can be different. The same bankruptcy rules apply to England and Wales but are different in Scotland and Northern Ireland.
Going bankrupt is a serious decision and one that needs to be thought through properly after considering all the facts in relation to your own circumstances. Getting the right facts is a fundamental part of the process and it is always recommended that you seek professional debt advice and help. You need to make sure the information you use and the advice you receive is specific to you and takes account of the appropriate legal jurisdiction.
Bankruptcy in England and Wales
You need a court order to be made bankrupt and in England or Wales and this can usually be done through the county court in the area where you have lived for the last six months. There are different ways of becoming bankrupt as this can either be with the debtor (you) applying to the courts or one of your creditors can apply to make you bankrupt if you owe them £750 or more.
An appointed administrator called the Official Receiver will become responsible for administering the process and will take control of your money and assets and will also deal directly with the organisations you owe money to so you don’t have to.
The costs of declaring bankruptcy at the time of writing are £700. You may have to make monthly payments from your income if you can afford it. After twelve months you are normally freed (formally discharged) from your bankruptcy. Bankruptcy can have other implications for your home, your job and your ability to get credit.
Bankruptcy in Scotland
The Accountant in Bankruptcy is the Government body responsible for administering bankruptcy in Scotland. Bankruptcy in Scotland is sometimes referred to as sequestration but the two terms mean the same thing.
In order to qualify for bankruptcy in Scotland you must owe at least £1500 and you must be living in Scotland now or have done so within the last twelve months. In addition to this you must be able to pay a fee of £200 and you must not have been through the bankruptcy procedure within the last five years. The final condition is that either you are what the courts call apparently insolvent which basically means you are unable to pay your debts on time, or one of your creditors will consent to you going bankrupt.
There is also a simplified route on how to declare bankruptcy for people on low incomes and who have little in the way of assets and this is called LILA (Low Income Low Assets).
The appointed administrator in Scotland is called the Trustee and this must be either a licensed insolvency practitioner or the Accountant in Bankruptcy.
Bankruptcy in Northern Ireland
If you are thinking about going bankrupt in Northern Ireland it’s important to be aware that the legal process of cannot be conducted through local courts as is the case in England and Wales and all bankruptcy applications must be made through the Royal Courts of Justice in Belfast.
The process itself is administered in two stages consisting of your initial application and the presenting of your bankruptcy petition and then a separate court hearing where the Court Clerk will hear and consider your petition. This is not usually done in the same day and so the process normally means a double trip.
After the Court has agreed to your bankruptcy you then must go through an interview with the Official Receiver who will then decide how long your bankruptcy will last, which is usually twelve months, and whether or not you can afford to make a monthly payment to your creditors. In addition to this the Official Receiver will decide what will happen to your assets.
Costs involved include a £525 deposit for administration, court fees of £115 and the legal fee for a solicitor to swear the detail of your statement of affairs which can cost between £5 and £10.
Seek professional debt advice
Bankruptcy is a straight forward legal process to help people resolve the debt problems they are unable to pay and where there are no other suitable alternatives. It is however a serious decision to take and has considerable implications for your financial circumstances both now and in the future. You should always therefore seek professional debt advice to ensure you have all the facts to hand before proceeding.