what are the effects of bankruptcy?

Question

do you have baliffs taking all your personal items, what percentage of your debts do you still have to pay? Can you still have a bank account

Answer 1

What is it?
Bankruptcy is a court order that you can apply for if you're in debt. It may be the best way for you to free yourself from excessive debts that you simply cannot pay by sharing out any assets you have among your creditors.

How am I made bankrupt?
There are two main ways:

By debtor's petition: This is where you make yourself bankrupt. To do this you must contact your local court to find out where your nearest county court dealing with bankruptcy is situated. You have to pay a £150 court fee and £325 deposit;
By creditors' petition: If you owe people £750 or more they can make a creditor's petition for your bankruptcy at a County Court.

Who do I need to tell?
Your mortgage lender, if you have one, as they may repossess your house if you can't pay.
Banks and building societies: when opening new accounts you must tell them you are bankrupt, just as you must inform your trustee of any money in the account that is above that needed for basic living expenses.
Utilities companies (phone, electricity, gas): they often want a deposit in advance for their services.

When will it end?
You are usually discharged from bankruptcy after one year and the money you owe can usually be written off .


How it affects you
Bankruptcy affects all kinds of different areas of your life. Here's how.

In relation to your creditors
If you are made bankrupt, you must not make payments direct to creditors. Creditors to whom you owe money when you are made bankrupt make a claim to your trustee. They should not ask you directly for payment; if you receive any requests, pass them immediately to your trustee to deal with and tell the creditor that you are bankrupt. There are some very limited exceptions to this non-payment rule. The main ones are:

creditors who have a mortgage or charge on your home (if mortgage payments are not made, the lender may sell your home);

court fines and other obligations arising under an order made in family proceedings or under a maintenance assessment made under the Child Support Act 1991.
Suppliers of services to your home (gas, electricity, water and telephone) may not demand from you payment of bills in your name which are unpaid at the date of the bankruptcy order. They may ask you for a deposit towards payment for further supplies or could arrange for the accounts to be transferred into the name of your spouse or partner.

You must pay continuing commitments such as rent (if you rent your home), together with any debts you incur after the bankruptcy.


Your assets
You will no longer control your assets. If you have a business, this will normally be closed and your employees dismissed.

You can keep the following items unless their individual value is more than the cost of a reasonable replacement:

tools, books, vehicles and other items of equipment which you need to use personally in your employment, business or vocation;

clothing, bedding, furniture, household equipment and other basic items you and your family need in the home.
All these items must be disclosed to the Official Receiver who will then decide whether you can keep them.

The Official Receiver will take control of all your other assets on the making of the bankruptcy order. He or she, or any insolvency practitioner who is appointed as trustee, will dispose of them and use the money to pay the fees, costs and expenses of the bankruptcy and your creditors.

The trustee may apply to the court for an order restoring property to him or her if you disposed of it in a way which was unfair to your creditors (for example, if you had transferred property to a relative for less than its worth).

The trustee may claim property which you obtain or which passes to you (for example, under a will) while you are bankrupt and may ask the court to order you to pay part of your wages, or salary or other income to him or her if your income is more than you need to live on.


Your pension scheme
The effect of the bankruptcy on your pension rights will depend on such things as:

whether you are a member of an occupational pension scheme or have a personal pension;

any scheme rules about what happens in the event of bankruptcy; and

the date at which your pension becomes payable to you.
You and your spouse or any dependant who has an interest in your pension, may wish to seek independent advice. But you must disclose full details of the pension to the Official Receiver/trustee who can consider whether there is an interest which passes to him or her.


Your life assurance policy
Generally, your trustee will be able to claim any interest that you have in a life assurance policy. The trustee may be entitled to sell or surrender the policy and collect any proceeds on behalf of your creditors. If the life assurance policy is held in joint names, for instance with your husband or wife, that other person is likely to have an interest in the policy and should contact the trustee immediately to discuss how their interest in the policy should be dealt with. You may want the policy to be kept going. Ask your trustee: it may be possible for your interest to be transferred for an amount equivalent to the present value of that interest.

If the life assurance policy has been legally charged to any person, for instance an endowment policy used as security for the mortgage on your home, the rights of the secured creditor will not be affected by the making of the bankruptcy order.


What bankrupts can't do
Now that you've been made bankrupt you have to follow certain laws.

The following are criminal offences:

obtaining credit of £500 or more, either alone or with another person, without disclosing your bankruptcy. (Note: this is not just borrowing money - it includes your getting credit, as a result of a statement or conduct which is designed to get credit, even though you have not made a specific agreement for it. For example, ordering goods without asking for credit and then failing to pay for them when they are delivered)
carrying on business (directly or indirectly) in a different name from that in which you were made bankrupt, without telling all those you do business with the name in which you were made bankrupt.
being concerned (directly or indirectly) in promoting, forming or managing a company without the court's permission, whether formally appointed as a director or not.
You may not hold certain public offices. You may not hold office as a trustee of a charity or a pension fund.

You may open a new bank or building society account but you should tell them you are bankrupt; they may impose conditions and limitations. You should ensure you do not obtain overdraft facilities without informing the bank that you are bankrupt or write cheques which are likely to be dishonoured. Tell your trustee about any money you have in the account which is more than you need for your reasonable living expenses. Your trustee can claim the surplus amounts to pay your creditors.


this link is comparing bankrupcy to an iva - it says that whilst a bankrupcy is advertised an iva isnt
http://www.abacus-homeowner-loans.co.uk/Bankruptcy-IVA-Comparisons.htm

Answer 2

At CREDITVAULT.NET- you can find the best financial solutions

RE What are the effects of bankruptcy?

do you have baliffs taking all your personal items, what percentage of your debts do you still have to pay? Can you still have a bank account

Answer 3

The extensive answer elsewhere applies to UK. In the US: there are exemptions protecting most items, but those exemptions vary by state (federal exemptions may apply also). For the average person in the US, it takes about 4 months from start to finish. Often, you will get offers for credit cards within a year (sometimes while going through bankruptcy!). Get a car loan - 1-2 years; home loan - 2-3 years. You will pay higher interest rates, you will not qualify for 0% rate programs.

Some debts are not dischargeable: most student loans, secured debts and most taxes. An experienced attorney can give you better detail for your specific situation

Answer 4

as far as i now, from doing a course which involved this a bit, is that you are not allowed to rent somewhere for up to two years after thoose two years you can, it can affect ur credit rating, no one will give u a card, debit or credit, cant get a mortgage, balifs come to you house, you might end up in the newspaper thats all i can think off soz.

Answer 5

If you declare bankruptcy, you are in for a world of hurt credit wise. No one is going to extend you credit for a gumball. You better have cash, because you will not get anything on credit for a good while.