Check how bankruptcy affects your belongings
When you go bankrupt, you can usually keep the things you need to live - for example your clothes, furniture and cooking equipment.
The rest of the belongings you own become the property of the person who deals with your bankruptcy. This person is called the ‘official receiver’.
When ownership of the rest of your belongings passes to the official receiver, this is called being ‘vested’.
The official receiver can also claim belongings that come into your possession before your bankruptcy ends. These belongings are called ‘after-acquired property’.
The official receiver will look at selling these items in order to make payments towards your creditors.
If the official receiver is allowed to sell something, you mustn't do anything to sell or give it away - even if you haven’t gone bankrupt yet. This could be a criminal offence, or could lead to you having to follow extra restrictions. The restrictions are called a ‘bankruptcy restrictions order’ (BRO). You could also be fined or sent to prison.
If you’ve already sold something or given it away, you can check the rules about what you did before going bankrupt.
Check what you can keep
There are some belongings the official receiver can’t sell. They’re called ‘exempt’ belongings.
You can usually keep the following items:
- household equipment, such as a cooker
- tools and equipment for your job - if you use them yourself rather than lend them to someone else
- a car or other vehicle you need for work or your basic needs - for example, if you’re disabled and can’t go anywhere without a car
- a car or other vehicle you need to care for a dependant
- other belongings that are necessary for your basic family needs
If you’re still paying for something on hire purchase, the official receiver might sell it - even if it would usually be exempt. If you’re not sure something is hire purchase, check if the loan agreement includes the words ‘hire purchase’.
The official receiver might also sell something exempt if it’s valuable. They’ll only sell it if they’d get enough money to replace it with something cheaper and have money left over to pay your creditors. For example, if they sell an expensive car they’ll give you £1,250 to buy another car and use the rest of the money to pay your creditors.
The official receiver can sell items which aren't needed for your job or your basic home needs. This includes:
- jewellery - you can keep your wedding ring if it’s a plain gold ring
- leisure equipment, such as games consoles and cameras
- caravans - check if you can keep a caravan if it’s your home
If someone will buy your belongings for you, tell the official receiver. They’ll usually agree if the person pays what the belongings are worth.
Goods bought on hire purchase
If you have goods you're paying for on hire purchase, there will normally be a clause in the agreement which lets the hire purchase company end the agreement if you become bankrupt. If this happens, you may have to return the item.
If you want to keep the goods, you may be able to persuade the hire purchase company not to cancel the agreement and ask the official receiver if you can carry on making payments. However, the official receiver may also take the goods and sell them.
Jointly owned belongings
If you own goods jointly with someone else, these may be sold. If this applies to you, the official receiver will take the following steps:
- approach the other owner to try to agree a value for your share of the goods
- offer the other owner the chance to buy out your share of the goods
- if the other owner doesn't agree, the official receiver might apply for a court order to sell the goods
If the belongings are sold, the money from the sale will be split between the official receiver and the other owner.
If you have a passport
Your passport can be taken away by the court. This would normally only happen if the court thinks you might try to leave the country to get rid of your belongings of value.
If you own property abroad
The official receiver might be able to sell your property. They have to ask the court in the country where your property is.
You should get legal advice from a solicitor to check if your property could be sold. Find out how to get legal advice.
If you disagree with the decision to sell an item
If you think the official receiver is acting unreasonably in taking or selling something you own, you can challenge the decision. You'll need to apply to the court to do this.
You should talk to an adviser and try asking the official receiver to change their mind before you decide whether to apply to the court.
If you disagree with the valuation of an item
If you disagree with how much an item has been valued at, you can get an independent valuation yourself. Show this to the official receiver and ask them if they'll change their mind.