What Happens if You Declare Bankruptcy & File for Bankruptcy for Yourself?

File for Bankruptcy for Yourself

You may consider bankruptcy and file for bankruptcy for yourself if your debts are unmanageable, and you cannot make the minimum payments on what you owe. Before you decide to file for bankruptcy for yourself, you may want to consider other options. Individual voluntary arrangement you can also find out more about Plan for Debt Management .

It is not a solution that will affect you or your credit rating for the rest of your life. This may be a good way to clear your debts and give yourself a new start. It’s vital that you know what to expect when you declare bankruptcy.


You Will Be Subject to an Investigation Into Your Finances

The process to file for bankruptcy for yourself is fairly straightforward. We’ve covered the steps in detail in this guide .

After you’ve paid the application fee, and received your application, all that remains is to wait for approval. The fee is split into two payments: a adjudicator’s fee and a deposit. If necessary, you can pay these by installments.

An official receiver has 28 days to make a decision on whether or not to grant you bankruptcy. They will examine your finances closely and may request additional information. It is important that you comply with their requests so the process can run smoothly.

The Official Receiver will also consider your income. If they believe you are earning enough to pay some of the creditors that you owe you money, then they may ask you to sign a Income Payment Agreement (IPA).

What Is an Income Payment Agreement?

This is a formal contract between you and the Receiver. You will usually be required to pay a monthly amount – typically a minimum per month – for a period of three years.

After your essential expenses are deducted, you will be asked to sign the IPA if there is a surplus or higher. Usually, essential expenses include:

  • Rent or mortgage payments
  • Utility Bills
  • TV License
  • Food
  • Insurance – car and house insurance (if you have been told by the official receiver that your vehicle can be kept)
  • Breakdown cover
  • Payments for child maintenance
  • Prescriptions
  • Broadband and phone

No Need to Worry About Creditors

After your bankruptcy is approved, creditors won’t be able to contact you anymore to demand payment. This is a relief for many. The Official Receiver will manage your creditors and organize the repayment or write-off of their debts. Repayment involves utilizing assets like your house or high-value car, as detailed below.

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Might Lose Your Home

You may have to sell your home to pay back a significant portion of your debts, and you will then lose your home. It is important that you find an alternative as soon as possible.

Can You Prevent Your House From Being Sold?

It is possible in some situations to keep your house from being sold during bankruptcy proceedings. However, this is case-by-case and not guaranteed and may be able to keep your home in certain situations:

And You Can Sell Your Shares to Anyone

It may be able to stop the sale of your house if your partner or relative is willing to buy your share. This share is known as your beneficial interest. It is the money that you own in the property (minus any mortgages or secured loans).

It is not enough to sign over your share in your house and prevent its sale. If you are found guilty, your bankruptcy restrictions could be lengthened, and you could also face a fine or prison.

Be Liable for the Expenses Incurred by Your Dependents.

You may be given an additional year to arrange their living arrangements if you can prove your family members or dependents are with you. This won’t stop the sale of your house but it will ensure that you have everything in order and that those you care about are provided for.

No Action Taken Against Your House

Your home can be sold within three years of the Official Receiver’s request. Your home will be returned to you if it is not sold or if any action has been taken.

If the official receiver has not done any of these:

  • Charge Order Application
  • You can sell your beneficial interest to a partner, relative, or friend
  • You and the people living in your house should be ordered to leave.

Then, your home is effectively yours again. This is a rare but important occurrence.

You Can Also Sell Any Other Assets That You Own

You sell your home and any other valuable assets to repay your creditors. Items of value, such as your car, must be included in the bankruptcy.

You may be able to keep your car if you consider it essential for your daily life, or if its value is very low.

What’s Not Considered Assets?

The following items are not assets:

  • Clothing
  • White Goods
  • Work Equipment

Bank Account Might Frozen

After submitting your bankruptcy application, authorities may freeze your bank account for 2-7 days.

You cannot use your funds during this period because the Receiver must investigate all your finances. The Official Receiver will first contact your bank, which will close the account immediately.

You’ll need to give over your credit and bank cards that you no longer use. The bank will also release money you urgently need to pay for everyday expenses such as food or household bills.

What Happens if You Share a Bank Account?

The bank will usually close the account, and refund half the money to you or your partner. The bank may remove your name from the account, and make it solely for the other named person.

Can You Open a Bank Account?

If you want to open a new account before filing for bankruptcy, it’s possible. “Limited options”, you should not open a current or current account. Even if you open a new bank account to pay your bills and receive your income before filing for bankruptcy, the authorities will freeze it for 2-7 days while examining your finances.

Restriction on Your Movement for 12 Months

You will face certain restrictions once authorities implement the approval of your bankruptcy. These can have a significant impact on how you manage your finances. You will not be able to apply for a credit, or act as a director without court approval. These restrictions are only valid for a period of 12 months.

Your Life Will Change After When You Declare Bankruptcy. However, at the End of 12 Months After Your Discharge, You Could Be Debt/Restriction-Free and Able to Rebuild Your Life.

And now you know how to file for bankruptcy for yourself and it’s ways, but remember! Declaring bankruptcy will affect your credit rating for 6 years. Creditors will consider you a high-risk borrower. You are now debt-free and can make a new start.

Need more bankruptcy help? or you didn’t still get how to file for bankruptcy for yourself?  Contact our experienced Jacksonville attorneys at Bruner Wright P.A. for more information!

Call our experts at 904-432-1200 to learn more about bankruptcy.

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