What Happen When You Declare Bankruptcy

What Happen When You Declare Bankruptcy

You may consider bankruptcy if your debts are unmanageable, and you cannot make the minimum payments on what you owe “have you asked yourself what happens when you declare bankruptcy?”. Before you decide to file for bankruptcy, 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 of filing for bankruptcy is fairly straightforward. We’ve covered the steps in detail in this guide .

After you’ve paid the PS680 application fee, and received your application, all that remains is to wait for approval. The fee is split into two payments: a PS130 adjudicator’s fee and a PS550 deposit. If necessary, these can be paid 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 an 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 of PS20 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 of PS20 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 take care of your creditors and will arrange for their debts to be paid off or written off. Debts are repaid by using assets such as a home or high-value car. This is explained in detail below.

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May You Lose Your Home

Will 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. You’ll be able to keep your home in certain situations:

You Can Sell Your Shares to Anyone

You’ll 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 home’s share in order to stop it being sold. If you are convicted of this bankruptcy offense, your bankruptcy restrictions could be lengthened. You could also face a fine or prison time. You can find more information on bankruptcy offenses by clicking here. It’s important to know about these in order to avoid getting into trouble.

You May 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 is taken against it.

If the official receiver has not done any of these:

  • Charge Order Application
  • You can sell your beneficial interest to a partner, relative or a 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.

Renting and Bankruptcy

Renting a property shouldn’t be affected by bankruptcy. You can live there as long as you pay the rent on time.

If you declare bankruptcy, you should check your contract and see if it has a clause that says you must inform your landlord, or else you can’t remain in the house.

If not, your landlord will find out about bankruptcy only if they run a credit report on you or look you up in the insolvency registry. You should be able continue to live there if your tenancy agreement automatically renews.

You Can Also Sell Any Other Assets That You Own

Your home and any other assets of value are sold to repay your creditors. Items of value, like 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 is not considered an asset?

The following items are not assets:

  • Clothing
  • You can also find out more about the following:
  • White Goods
  • Work Equipment You Need

Your Bank Account May Be Frozen

After you submit your bankruptcy application, your bank account may be frozen for 2-7 days.

  • You cannot use your funds during this period because the Receiver must investigate all of them. 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. However, your options are limited. 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, it will be frozen for 2-7 days as your finances are examined.

Restriction on Your Movement for 12 Months

You will be subject to certain restrictions once your bankruptcy has been approved and is being implemented. These can have a significant impact on how you manage your finances. You will not be able to apply for a credit of PS500 and above, or act as a director without court approval. These restrictions are only valid for 12 months.

Certain Obligations Will Be Imposed on You.

Other obligations you must also meet:

  • You must adhere to all bankruptcy restrictions.
  • Making payments directly to creditors
  • We will take care of your assets, and then hand them over to you. All the paperwork that goes with them is also included.
  • Telling the official receiver of any assets you acquire or windfalls that you receive in the bankruptcy proceedings.

And change your life when you declare bankruptcy. However, at the end 12 months after you have been discharged you could be debt/restrictions free and be able to rebuild.

Declaring a 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. Now you know What Happen When You Declare Bankruptcy/ Let me ask you – do you have bankruptcy problem? 

Call our experts at 904.432.1200 to learn more about bankruptcy.

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Bruner Wright is the top-rated experienced bankruptcy lawyer in South Georgia and the Florida Panhandle. Our team has more than 30 years of experience helping people file Chapter 7 bankruptcy. Chapter 11 bankruptcy. Chapter 12 bankruptcy. Chapter 13 bankruptcy. Our practice has been very successful in helping people discharge their debts. We offer a personal service that is comprehensive and thorough in all aspects of our industry. We are responsive to the needs of our clients.

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Contact us today to schedule a consultation to find out if bankruptcy is the best option. A member of our team will review your case to help you make the right choice. We are focused on consumer bankruptcy. We want you to achieve financial stability.