A Guide To Filing For BankruptcyBy Jeff Nevil

What is Bankruptcy?

Bankruptcy occurs when an individual or company is unable to repay the debts it owes. In order to be declared bankrupt, you must first be legally recognised as such by court order.

This usually happens through:

1: Applying to the court directly and filing for bankruptcy if you are unable to pay your debts

2: Your creditors can apply to have you declared bankrupt if you are unable to repay

them within your agreed terms.

Step 1: Getting the Right DocumentsIn order to file for bankruptcy, you’ll need two crucial forms:• Debtor’s Bankruptcy Petition Form• Statement of Affairs (Debtor’s Petition)

Key details you’ll need to include are previous addresses, information on your current employment, and details of the creditors / lenders to which you owe money.

You can get all the relevant information on your creditors from letters you have received from them, or you can call them and request their details.

When filling in the Causes of Bankruptcy section in both of these forms, you are required to provide as many details as possible. Putting the reason down simply as ‘due to recession’ is likely get your application ignored, so explain exactly what has happened.

Include details of:• Relationships ending• Higher living costs• Redundancy / firing• Illness• Bereavement• Reliance on credit or borrowing cycle

Step 2: Paying a Bankruptcy Fee

Unfortunately, another mandatory part of filing for bankruptcy includes paying two fees:

• Official Receivers Fee - £525 (paid to the Insolvency Service)

• Court Fee - £175Total = £700

You can pay these fees in cash to the court, by postal or bank order, building society, solicitors or charity cheque. Currently, the court does not accept personal cheques,

credit or debit card payments.

How can you find the money?Finding the money can be especially difficult during a bankruptcy filing, but there are several ways to find or save the money:

• Stop paying your creditors, as you’ll soon be filing for bankruptcy to alieve yourself of their debts.

• Borrow from family or friends, and ensure they are payed back in the bankruptcy administration by informing your official receiver.

• Certain unionised work forces, such as the police and army, can help towards your bankruptcy fee if you can adequately demonstrate your financial situation.

• Sell any assets you own towards the fee.

Step 3: Going to CourtDon’t panic! You’re not going to be in a packed courtroom speaking in front of an entire jury. You’ll only need to hand over your bankruptcy fee and paperwork (bring three copies of each form) to the judge and wait whilst your documents are checked.

You may be called in to clear up any discrepancies, but apart from that you should receive your bankruptcy order number the same day. You can then pass this onto your creditors.

TipsPut a cap in your spending, and ensure you have properly budgeted both personally and professionally, whether through personal financial auditing or business budgeting software.

Tips

You may also receive a call from an Official Receiver after going to court. It is at this point you can work out an Income Payment Agreement to begin clearing your debt.

TipsEnsure you stick to the terms of your bankruptcy and be honest with the court, or you could be hit with a Bankruptcy Restrictions Order (BRO) which means you’ll need to come in for another court hearing.

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