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Bankruptcy

About bankruptcy

This page tells you about bankruptcy. It helps you to work out whether bankruptcy is an option for you, explains how to go bankrupt and tells you what happens when you're made bankrupt.

Bankruptcy is a court order that you can apply for if you are in debt.

Someone you owe money to can also apply to make you bankrupt even if you don't want this.

You might want to think about bankruptcy if you have no money to pay your debts, or have so little that it will take you years to repay them.

To find out how to work out if you've got money to pay off your debts, see How to sort out your debts.

Once you have been made bankrupt, you don't have to deal with the people you owe money to (your creditors). An official called the Official Receiver takes control of your money and property, and deals with your creditors.

When the bankruptcy order is over, you can make a fresh start and the money you owe is usually written off. In many cases, this can be after only one year. Creditors have to stop most types of court action to get their money back following a bankruptcy order.

However, there are disadvantages to going bankrupt. These include the fact that it may cost you up to £700 to go bankrupt, you could lose your home if you own it and may lose other valuable possessions too.

Bankruptcy might not be your only option and it might not be the best one for you.

To find out what other options you might have for dealing with your debts, see Options for dealing with debt.

If you are faced with bankruptcy, you'll need expert advice. You can get advice about your debt problems and bankruptcy from your local Citizens Advice. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.

What are the advantages of going bankrupt

Some advantages of going bankrupt are:

  • pressure is taken off  you because you don't have to deal with your creditors
  • you are allowed to keep certain things, like household goods and a reasonable amount to live on
  • when the bankruptcy order is over, you can make a fresh start. In many cases, this can be after only one year
  • creditors have to stop most types of court action to get their money back following a bankruptcy order
  • the money you owe can usually be written off.

What are the disadvantages of going bankrupt

Some of the disadvantages of going bankrupt are:

  • it will cost you up to £700 to go bankrupt. It can be more if, for example you use a solicitor
  • whilst you are bankrupt, you can't apply for more credit
  • if you own your own home, it might have to be sold. However, you may be able to apply to the Housing Executive for re-housing
  • some of your possessions might have to be sold. For example, you will usually lose your car and any luxury items you own
  • some professions don't let people who have been made bankrupt carry on working
  • if you own a business, it is more than likely that the Official Receiver will close down your business, dismiss your employees and sell off the assets
  • going bankrupt can affect your immigration status
  • you can't keep your bankruptcy private. Your details will be listed in the Insolvency Register, which people can access on the internet. Your case could also be published in your local newspaper if there are exceptional circumstances
  • even when you are no longer bankrupt, you could have another order, called a bankruptcy restriction order made against you. These orders can be made, for example, where you did not co-operate with the Official Receiver, or you took on debts knowing that you had no hope of paying them back. They can last for 15 years, and will make your financial affairs very restricted
  • even when you are no longer bankrupt, there are some debts such as court fines and student loans that will never be written off.

What debts are excluded from bankruptcy

Not all debts will end with bankruptcy.  You will have to still pay the following debts:

  • Social Fund debt
  • Student Loans
  • Maintenance or child support payments, but not lump sum orders or costs arising from family proceedings
  • Court Fines
  • Debts incurred through fraud
  • Debts arising from personal injury claims.

How to go bankrupt

If you decide to go bankrupt, you will need to apply to court.

Before you do this, try to make sure you have enough cash for day-to-day expenses as once a bankruptcy order is made, your accounts will be frozen.

To apply to court for bankruptcy you will need to take the following steps:

Find out which court to go to

All bankruptcy cases in Northern Ireland are dealt with in the Chancery Division of the High Court in Chichester Street, Belfast.  The office in the Court is the Bankruptcy Office.

Contact details for the High Court are:

Chichester Street
Belfast
BT1 3JF

Telehone: 028 9023 5111

Pay costs and fees

When you apply to go bankrupt, you will need to pay a deposit of £525. You won't get this back.

There is a court fee of £115. Depending on your circumstances the court may waive this fee.  You should ask the court staff for more information on this.

There will also be a fee for a solicitor to witness your sworn affidavit. This will usually cost around £7.

You should make sure you have enough money to cover the deposit before you apply to go bankrupt. If you can't afford to pay the deposit, you might want to think about applying for a debt relief order instead.

Fill in a bankruptcy petition and a statement of affairs

You will need to complete the bankruptcy petition (form 6.30) and statement of affairs (form 6.31). Both are available from the High Court. The Insolvency Service has a website allowing you to fill in your statement of affairs form online. You can also download the bankruptcy petition form and pay your deposit using this site.

When you fill in the forms, you must list all your creditors, even if you disagree with one of the debts. You must also give details of all your bank account and building society accounts. You will be asked to list other assets and items with a resale value, for example, antiques. Any valuables you list in this section of the form risk being sold.

It’s a good idea to keep a copy of your completed petition and statement of affairs forms as you may need them later at the interview with the Official Receiver.

Swear an affidavit

In Northern Ireland you swear an affidavit before a solicitor stating that the information you are giving the court is true.  This means that you swear to the court you have told the truth in the petition and statement of affairs forms.  You will usually have to pay the solicitor a fee for this service of around £7.

If you make false statements on the forms, or don't tell the Official Receiver about all your property, this is a criminal offence and you could be fined or sent to prison. It is also a criminal offence to conceal property or documentary evidence, or to get rid of property before you go bankrupt.

Getting a hearing

In order to get a hearing you will need to take the following forms to the court when a time for the hearing will be arranged:

  • Bankruptcy Petition
  • Statement of Affairs, if you filled it out online take a printed copy
  • Sworn Affidavit
  • Deposit or receipt for the deposit if paid online.
  • Court Fee

It is a good idea for the hearing to be held as soon as possible as this will protect you from further legal action by your creditors, the people you owe money to.

At this point you should get together money to live off once an order has been made as your bank accounts will be immediately frozen after this hearing if your petition is successful.

The hearing

You should try and attend your bankruptcy hearing.  At the hearing, the court can make a number of decisions:

  • Accept your application by making a bankruptcy order.
  • Reject your application if, for example, they think there is a better solution to your debt problem.
  • Stay proceedings, usually if the court needs more information
  • Appoint an Insolvency Practitioner if the court thinks an Individual Voluntary Agreement (IVA) may be appropriate

What happens when a bankruptcy order is made

Once the bankruptcy order is made, all your bank and building society accounts will usually be frozen immediately. This will include any joint accounts.  Your money will come under the control of the Official Receiver.

The Official Receiver will arrange an interview with you.  This interview will usually happen within ten working days of your order being made.  Depending on your circumstances this can be done by telephone.  If you are prefer a face-to-face interview you can request this.  You will have to confirm the interview, collect any financial information they have requested and fill in a questionnaire.  This questionnaire repeats a lot of the information from the statement of affairs. It will help to have a copy of your statement of affairs form handy for this interview.

After your interview, the Official Receiver will tell your creditors about the bankruptcy, and send them a report with a summary of your financial situation. Your assets will be sold to pay off some or all of your debts. The costs of the bankruptcy are paid first from the money that is available. The costs include fees that the Official Receiver charges for dealing with your case.

When does bankruptcy end

Your bankruptcy will normally end after one year.

The Official Receiver will tell you when the bankruptcy is over. Most debts that haven't been paid will be written off. Some debts are not written off at the end of bankruptcy and you will need to make arrangements to sort these out.

You can get help to sort out debts which you can't write off from an adviser, for example, at a local Citizens Advice. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.

Effect on your credit rating

Your bankruptcy will appear on the Insolvency Register until three months after your bankruptcy order has ended (been discharged). If there is a bankruptcy restrictions order against you, this will appear on the register for the length of the order. The register is a public record. Anyone can search the register free of charge online.  There are different registers for different parts of the United Kingdom.  Search the insolvency register for:

The bankruptcy record will stay on your credit reference file for six years so it may affect your ability to get credit even after the order has ended.

Debt relief orders

If your debts and income are below a certain amount, you may want to think about applying for a debt relief order instead of bankruptcy. This is a cheaper option.

You must have debts of £20,000 or less. These debts must be of a certain type. You must also have spare income of £50 a month or less after paying your normal household expenses.

For more information about debt relief orders, see Debt relief orders.

More help with bankruptcy and debt

The Insolvency Service

You can get more information about bankruptcy from the Insolvency Service website. Information is also available in languages other than English.

Enquiry line: 028 9025 1441

Website: www.detini.gov.uk

Citizens Advice

You can get more information about how to deal with debt on the following pages:

If you are thinking about going bankrupt, you should get advice from an experienced adviser. Your local Citizens Advice can give advice about bankruptcy. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.

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