Questions on bankruptcy: Your obligations and entitlements.
OVER the past few weeks I've been asked many questions about bankruptcy. Here I answer the most common queries: ?What is bankruptcy? Bankruptcy is a formal court procedure which can be started by you or by someone that you owe money to (your creditors). If you are made bankrupt, most of your assets will come under the control of a "trustee in bankruptcy", who will sell them to pay your creditors. However, you will often be allowed to keep personal belongings.
Once you have been made bankrupt, you don't have to deal with your creditors. An official, called the Official Receiver, takes control of your money and property. When the bankruptcy order is over, the money you owe is usually written off and you can make a fresh start.
How long will the bankruptcy last? In most cases it lasts for a year, although discharge can be suspended if you fail to comply with your obligations under the bankruptcy.
What are the disadvantages? It will cost you up to PS700 to go bankrupt. If you own a business, it is more than likely that the Official Receiver will close it down and sell off the assets. Details of your case will be made public in the Insolvency Register.
Can I keep my car in bankruptcy? Generally yes. However you have to show a need for a car and it must be of modest value.
Will I lose my house in bankruptcy? This is looked at on a case by case basis. However, in most circumstances you will be able to keep your family home.
Can I have a mobile phone if I am bankrupt? You are allowed a mobile phone - just as you are allowed all of your basic living expenses.
Can I get a mortgage if I have been made bankrupt? You will not be able to obtain a mortgage as you will not be allowed to take out any credit. However, it is possible to obtain a mortgage after being bankrupt and you will find many specialist lenders online who can help you sort this out.
For more information on bankruptcy, go to Dean's FREE legal and consumer website, youandyourrights.co.uk