Bankruptcy is termed as a legal status that is a very beneficial way of clearing the debts you are not able to pay. Bankruptcy lasts for years. When you become a bankrupt, the non-essential assets of yours like possessions, property and also extra income are used to clear or pay the money to the creditors. By the end of the bankruptcy period, the situation will be like that most of your debts will get discharged. Now the question arises what happens when you file for bankruptcy? Before this, it is very vital for you to know how do you become a bankrupt. There are various factors based on which the high court can declare you a bankrupt. It is carry forwarded by issuing a bankruptcy order and after that it is presented with a bankruptcy petition. This petition can be offered by:
• The debtor
• One or more creditors
• The supervisor
There are number of forms which you need to fill if you have decided that bankruptcy is the best option for you. You do not have to pay for these forms, and it will be available in the bankruptcy and chancery division of the high court.
What Happens When You File Bankruptcy?
- Insolvency Rules (NI) 1991 form 6.30, the petition – It is a kind of request form where you are requesting the court for you to be made bankrupt and also the reasons behind your request.
- Insolvency Rules (NI) 1991 form 6.31, the statement of affairs – In this form you will ask to list all your assets and also all your debts. It will also ask for the name and address of the creditors plus the amount you need to pay to each one of them.
It is very important that you make a complete disclosure of your debts and assets. After the completion of the form, you will be asked to make an affirmed statement for the completeness and accuracy in front of a solicitor or an officer of the court.
When you take your statement and petition in the court you need to pay the below mentioned three fees:
1. For the cost of administering your bankruptcy, the deposit of £525 need to be paid to the dept. Of enterprise, trade and investment. You need to deposit this in all kinds of cases. Payment can be made in postal orders, cash or check. Make sure that the checks are payable to the official receiver. Do not give the personal check it will not get accepted.
2. Next is the court fee of £115. You can make the payment by postal order or check. This need to be payable to Northern Ireland courts and tribunals service. In most of the circumstances, the court just does not take this fees. Like if you have some income support and you are not sure whether to apply for the reduction of the fees or not. The staff of the court will advise you to do the same.
3. The time you swear your statement you need to pay some amount to the solicitor. It will cost you around £7 for the service.
After this, you can take your form and the receipts of all the deposits in the high court.
There are various ways to file bankruptcy. It has its pros and cons. To be on the safe side, do consult with a lawyer in advance so that he/she can help you with the best option available for your circumstances. There are chapter 7 and chapter 13 bankruptcy that you can file based on your needs and situation.
There are several obligations that you need to tell the officer. Like:
• Hand over all the assets to the official receiver with an official paperwork that includes insurance policies and bank statements.
• Provide all the details to the official receivers. Like assets, finances and creditors.
• Stop using accounts of the building or banks and credit cards.
• At the time of bankruptcy tell your trustee about your income and new assets.
• Do not make direct payment to the creditors.
Chapter 7 Bankruptcy:
There are some common reasons for filing this bankruptcy. Like large medical expenses, unemployment, marital problems and overextended credit. It is also termed as straight bankruptcy. It kills the assets to pay as much amount possible of your debt. This cash is then distributed to the credit card companies and banks. Within the period of four months, you will receive a notice of discharge. This record will stay on your credit report for around ten years. For many, this is the best way to get a quick and fresh start. Still it is not the right method for everyone. As all the assets are taken from you and sold to repay the creditors. As a debtor, if you own a company or family home or some other personal assets then it is not a good option for you.
Chapter 13 Bankruptcy:
Filing this bankruptcy option is the best choice for those who have a property that they want to keep. It is also termed as reorganization bankruptcy. It enables people to pay their debts within a period of 3 to 5 years. This chapter offers a grace period for those who have a predictable and consistent annual income. If any debt remains at the end of this grace period, it gets discharged.
For some, it is hard to admit that they need help. These type of people just do not want to accept that they cannot do it alone. There is no harm in accepting it because this is the reason the government has made bankruptcy laws. It helps not only the creditors but also protects you. If you have a lot of debt overload, then it is time for you to face the financial facts.
After all this, if you are not filing the bankruptcy you could be doing a lot of harm to yourself. Make sure you file it with a good lawyer and with the right information. Now you know what happens when you file for bankruptcy? It is a great option to deal with your financial crises.