How do you apply for bankruptcy in England and Wales?
Since 2016, bankruptcy applications in England and Wales are made online through the Insolvency Service website at gov.uk/apply-for-bankruptcy. The decision is made by an adjudicator, not a court. The application fee is £680. You do not need a solicitor to complete the application.
What is a Debt Relief Order and who qualifies?
A Debt Relief Order (DRO) is a cheaper alternative to bankruptcy for people with limited assets and low income. To qualify you must have qualifying debts of £30,000 or less, assets worth no more than £2,000 (with a car worth no more than £4,000), and a surplus income of less than £75 per month after reasonable household expenses. A DRO costs £90 and must be applied for through an approved intermediary.
What is an IVA and how does it work?
An Individual Voluntary Arrangement (IVA) is a formal agreement between you and your creditors to repay a portion of your debts over a fixed period, usually five years. It must be set up and managed by a licensed insolvency practitioner. Creditors holding 75% by value of debt must agree to the IVA for it to bind all creditors. An IVA avoids bankruptcy but it will affect your credit rating.
When are you discharged from bankruptcy in the UK?
In most cases you are automatically discharged from bankruptcy after 12 months. Discharge releases you from most of the debts included in the bankruptcy. However, certain debts are not discharged including student loans, child support, fines, and any debt arising from fraud.
What happens to my home and assets in bankruptcy?
Your assets vest in the official receiver or trustee in bankruptcy when you are made bankrupt. Your home may be sold if you have equity in it, though the trustee must act on the interest within three years or it reverts to you. Some assets are exempt including tools of trade and basic household items. Your car may be exempt if it is of low value and needed for work.
What is an income payments agreement in bankruptcy?
If you have surplus income above what you need for reasonable domestic needs, the official receiver may require you to make payments for up to three years through an income payments agreement or income payments order. This can continue beyond your discharge date.
What are the alternatives to bankruptcy in England?
Alternatives include a Debt Relief Order if you qualify, an Individual Voluntary Arrangement, a debt management plan arranged through a charity like StepChange, or negotiating full and final settlement offers with individual creditors. A debt management plan is an informal arrangement with no legal standing but it stops creditor calls if accepted.
Will bankruptcy affect my employment?
Bankruptcy may affect certain professions and positions. You cannot act as a company director, insolvency practitioner, or solicitor while bankrupt without court permission. Some financial services roles and public offices are also affected. Check your employment contract and professional body rules before applying.
Where can I get free debt advice in England and Wales?
National Debtline (0808 808 4000), StepChange Debt Charity (0800 138 1111), Citizens Advice, and MoneyHelper all provide free, confidential debt advice. Approved DRO intermediaries are also free of charge to access. You should never pay for debt advice that is available free from a charity.
How does uplaw.ai help with bankruptcy and IVAs in the UK?
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