- It usually costs less than an Individual Voluntary Agreement.
- Creditors are legally obliged to accept that they will not be paid in full.
- A Trustee takes over the payment of creditors and all the decisions. The Trustee is someone who will be either the Official Receiver (a civil servant and officer of the Court), or a licensed insolvency practitioner.
- When you are discharged, all debts are written off, and your creditors cannot pursue you any more for those debts unless fraud is involved.
- If you own a business, its future could be jeopardised.
- You cannot hold public office or practice certain professions or be a company director
- Your bankruptcy is made public in your local press.
- You are regulated by the trustee until your discharge (see definition below). You must report any relevant changes in circumstances.
- Some debts cannot be written off and therefore still have to be paid. These include fines, child support, maintenance etc.
- If you have any joint debts, creditors can still pursue the other, non-bankrupt debtor.
Is there an alternative?
An alternative to bankruptcy is an Individual Voluntary Arrangement (IVA).
Definition of discharge
Being discharged from bankruptcy means that the bankruptcy order (made by a court) is lifted. All the restrictions (like having the trustee in bankruptcy control your finances etc.) are lifted. The bankruptcy remains on your credit record, but once you are discharged, you can resume normal activity, and your previous creditors have no further claim against you for those debts. (However, certain privileged debts are exceptionally not lifted - such as Student loans). Normal bankruptcies take 3 years for the discharge to come through, but the trustee may apply to the court for an extension if the trustee believes that circumstances warrant it.
The Debt Advice Bureau is an organisation advising about debt management, bankruptcy and IVA.
More information can also be found at
www.insolvency.gov.uk or through telephone enquiry
line 0207 291 6895
In debt and need help?
Call a CCCS counsellor at 0800 138 1111