The Bankruptcy Process and How It Works

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The Bankruptcy Process and How It WorksWhile filing for bankruptcy is a serious financial decision, it doesn’t have to be complicated or intimidating. In fact, it may be the right option if debts are weighing you down and have exhausted all other options. That said, the following simple steps outline the process involved in obtaining a bankruptcy order.

Meet with a debt advisor

While declaring bankruptcy offers you a way to waive your debts, it does come with consequences that need to be seriously considered. Firstly, you should be aware that filing for bankruptcy is likely to lead to the sale of some of your most valued assets including your home. Your business assets are also likely to be lost if you have any. Consequently, the best place to start is to set up a meeting with an experienced debt advisor, who will be able to offer personalised information about your situation and will enable you to find out if there are other options to consider. If you and your advisor settle for bankruptcy, then you should take the next step, which is filing for bankruptcy.

Fill out the forms

Filing for bankruptcy isn’t a difficult process, but you do need to make sure you get it right. The first part of the process is usually to complete two forms and pay the fees. The first form is the Debtor’s Bankruptcy Petition, Form 6.27, which is short and usually requires your personal information. The next is the Statement of Affairs, Form 6.28, which is slightly more complicated as it requires you to fill in some of your background information such as previous residential addresses, your current occupation and details about your creditors. After filling out the forms, you are required to make three copies of each. The next step of the process entails paying two sets of fees – £525 for the Official Receiver and £180 as a court-charge. In certain circumstances, part or all of the court fees may be waived, so be sure to consult your debt advisor about that possibility.

Submitting your forms to the court

Once you’ve sorted out your forms, you need to take them to the relevant court. This will depend on your location, but will typically be the county court in the area you’ve lived in for more than six months. Be sure to confirm whether the court operates on a walk-in or appointment basis. You should then submit your forms in triplicate together with the fees and wait for the documents to be reviewed. If everything is in order, you will be advised to see the registrar or get a phone appointment with your Official Receiver.

Working with the Official Receiver

When you are declaring bankruptcy, the Official Receiver essentially becomes the manager of your finances and the person in charge of your assets. He or she will take on all dealings with your creditors and determine which assets will be sold off. The Official Receiver will also work with you to see if your income allows you to make any payments. Moreover, during the bankruptcy period, which typically lasts a year, you will not be able to use your bank account or credit cards and will have to report any new assets or income growth to the Official Receiver.

When the Bankruptcy ends

This depends on the agreement terms and the Official receiver will inform you when your personal bankruptcy is complete. Your bankruptcy will generally end after twelve months which is when you are discharged.

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