Bankruptcy is when a person is no longer able to pay their debts (and has previously exhausted every possible option to pay outstanding debts). Declaring bankruptcy is in many cases a matter of last resort. The process of applying for bankruptcy is in its self a big step and is not something you can reverse, so before deciding to declare bankruptcy or not you have to be certain it’s the right thing for your situation.
While it’s true that bankruptcy can give you enable you to write off outstanding debts and effectively start again it can also have big and far-negative reaching impacts on your life for years to come (it’s also not such an easy thing to do. With this in mind, gathering as much information and advice on bankruptcy as possible before you decide whether it’s the right move for you and your circumstances. Below you’ll find a quick overview of how the basic bankruptcy process typically works for England and Wales (Scotland and Northern Ireland follow a slightly different set of processes).
You fill out the bankruptcy form and pay the fee
This form is online at the GOV.UK website and you can fill it out at your own pace, saving the completed pages as you go. The fee is £680 and is non-refundable unless you cancel the application before you submit it.
If you pay the fee online you can pay it in instalments – the minimum amount is £5 – but if you pay it in cash at a bank, you must pay it in full.
Submit your form
When you’ve completed the form, you’ll be asked to confirm that you’re the person named on the form, the information you’ve supplied is accurate and that you agree to a credit check.
You mustn’t make any false statements or leave out details of your property and assets as this is a criminal offence and you could face a fine or a prison sentence.
Wait for the adjudicator’s decision
The adjudicator has 28 days to decide whether to accept your application or not. In some cases, they’ll need more details, and if they ask for this additional information, they have an extra 14 days to make the decision.
Bankruptcy application rejected
If your application is rejected, you can ask for a review and if you’re still rejected after the review, you can appeal against the decision in court. If you decide to appeal, you must submit form N161 to the nearest court to you that deals in bankruptcy.
Bankruptcy application accepted
The first thing that happens is that your bankruptcy order is made. When this happens, you’re officially declared bankrupt and your bank or building society accounts are frozen immediately if they weren’t before.
You must cooperate with the official receiver
The bankruptcy case is then passed on from the adjudicator to the official receiver. Your money and property are now under the official receiver’s control and you should hear from them within two weeks of your bankruptcy order. They’ll arrange an interview – usually over the phone – to talk about your bankruptcy.
From then on, the official receiver will administrate your bankruptcy by distributing money and property between your creditors or supervising your appointed bankruptcy trustee. You legally have to cooperate here, even if you don’t like what happens.
The discharge from bankruptcy
If you cooperate with the receiver, after one year you’ll typically be discharged from your bankruptcy.
You may want to open a new bank account
Your likely need / want to open a new bank account as soon as possible. Some banks will reject your applications, but you should be able to open a very basic account. If you have trouble finding an account, your bank and the official receiver may allow you to use one of your existing accounts.