If you have landed on this article, it is quite apparent that your finances have not been quite good lately and you are struggling to pay the money you owe to the creditors so finally, you have decided to push the bankruptcy button.
To be fair, declaring bankruptcy does seem scary, primarily because of the social stigma attached to it like your name appearing in the newspapers and the fear of interviews and questions. People get intimidated and don’t file for bankruptcy when essentially it can be the only way to sort out your financial problems and besides, you are not alone, every year thousands of people file for bankruptcy so it is something that is pretty much socially acceptable now.
However, declaring bankruptcy is a sensitive matter and in order for you to secure the maximum out of it at minimal stakes, you need to have yourself thoroughly educated about the process. Filling for bankruptcy is a tough decision so its better to acquire as much knowledge as you can before you actually apply.
In this article, we are going to provide a step by step guide on how to apply for bankruptcy legally as well as some other useful information that will help you in the process.
Step 1: Fill Out the Online Application Form
The first step is to create an account and fill out the application form. You must thoroughly complete the form as your application almost entirely depends on it.
Here are some important points you need to consider while filling out the form.
- Provide all your previous addresses you have ever lived at and the details of all your jobs and occupations. Try to share maximum information and always be honest because the information you’d provide would be scrutinized by the team.
- Provide the contact details of your all creditors and its a good practice to check if any of them has changed the address or phone numbers, its best to provide the latest contact details.
- Carefully and thoughtfully write down the causes of bankruptcy, write in detail exactly what has happened instead of simply putting “due to recession”, it is totally unacceptable. Don’t hesitate to mention details of your relationship breakdowns, medical history like illnesses and reasons for turning to credit to pay the bills
- List all the efforts and possible measures you took to clear the debts such as IVA’s, debts management plans, etc and give the reasons as to why these couldn’t help.
Never ever make any false statements or hide details about your property.It is a criminal offense and can have serious repercussions and you might be heavily fined or sent to prison.
Step 2: Pay the fees
The total application fee for the bankruptcy filing is £680. The money is refundable only in the case if you decide not to proceed with your application. You have the option to pay the fees online by your debit or credit card. The online payment can also be made in installments and the minimum payment begins with £5 and the further amount can be made in as many installments as you need.
If you decide to pay cash at the bank, you will be told about the bank details when you fill the form. However, the cash payment mode does not offer the installment facility.
If you are totally broke, raising the fee can be problematic so here is what you can do,
- Stop paying the creditors who you are going to mention in the application form and demonstrate to them that you have used the money for bankruptcy fees.
- Borrow from family/relatives, if you take this measure, do inform the officials as you might get part of its reimbursed in their accounts provided if the bankruptcy administration has sufficient funds.
- If you are an ex-civil servant or military or police person, you can ask for help from your service unions or you can sell an asset that you fully own.
Step3: Wait for the Adjudicator Decision
Once you have submitted the application online, it will be reviewed by an official adjudicator of the insolvency service, it is up to them to decide if your application should be considered for bankruptcy or not. There is no official timeframe but one usually gets a reply within four weeks. If they require more information, they’ll contact you and will take 14more days from then onwards to make a decision. If they reject your application, you can request for a review, if they still adhere to their original decision, you can appeal in the courts against the decision.
Soon as the bankruptcy order is made, all of your bank accounts are frozen and the official receiver will take the control of your money and property so it is wise to withdraw some money beforehand to keep yourself afloat for next few weeks.
Step4: Interview with the official receiver
In two weeks, the official receiver who holds the control of your money and property will contact you for a meeting. These interviews are presently being conducted over the phone and one rarely has to appear in-person in front of the receiver.
The receiver will look on the possible ways to pay your debts like splitting your property and money between the creditors or guide the assigned bankruptcy trustee who is supposed to do it.
Try to fully cooperate with the official receiver in all these proceedings because if you fully cooperate with the receiver, there is a fair chance that you might be discharged from bankruptcy just after a year, otherwise, it may take longer.
Step5: Open a new bank accounts
As your previous bank account would be sealed, you will have to open a new bank account to have your salary or earnings paid in. You might face trouble opening a new account but a basic bank opening would hopefully not cause too many troubles.
Nobody likes filing bankruptcy but at times it is your last resort. Thankfully there are a lot of consultation companies that can help you file your bankruptcy case.