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 What It's Like To Go Bankrupt
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Junior Member

United Kingdom
267 Posts

Posted - 24 March 2007 :  08:32:56  Show Profile  Reply with Quote
I took this article from: http://www.fool.co.uk. I thought it summed up the process well. As of 1 April 2007 fee will be £485. All payments to the county courthouse are in cash. NO debit cards or cheques will be taken by court staff for bankruptcy fees. Contact your local courthouse for how many copies you need of the petitioning documentation. It varies according to where you live.

What It's Like To Go Bankrupt

By Jane Mack (TMFJane)
April 10, 2006

Among the many fascinating discussions posted on our Dealing with Debt board, a subject that crops up with increasing regularity is bankruptcy. There are people contemplating it and are terrified, people who have taken the plunge and post about what it's like, and then there are those who have been there, done that, got the T shirt.

The thing I've noticed about these discussions is that just about everyone going through the process of bankruptcy has found the courts and the Official Receiver (OR) pretty sympathetic. Surprisingly so.

The fact is, bankruptcy doesn't carry the stigma that it used to and recent changes to the law have made it a much quicker process. Bankruptcy simply frees you from overwhelming debts so you can make a fresh start and ensures that your assets are shared out fairly among your creditors. This may include your house but not always.

The worst bit about it is probably the paperwork which starts with completing a Debtors Petition in triplicate and a Statement of Affairs in duplicate. You present your petition to your local court in person handing over the money for the cost of it while you're at it. At the moment it costs £482, which is made up of a £150 court fee (which you don't need to pay if you're on benefits) £325 which goes towards paying for the administration of your bankruptcy, and a £7 affidavit fee.

You then see a judge for about two minutes who, if satisfied that a bankruptcy order is appropriate, will agree to make an order at which point you are declared bankrupt. Note though that, if the court is busy, you may have to leave your details for an official to review later.

The next step is to meet the OR who goes through your paperwork with you to establish the sequence of events that led to your bankruptcy and work out a repayment schedule called an Income Payment Order based on what you can afford. This will last for three years even after you have been discharged.

Although bankruptcy can last for up to a year, the OR can discharge you even earlier if s/he think it's appropriate so at some point you'll get a letter and questionnaire asking for an update of your personal circumstances.

Once the questionnaire is returned the OR contacts your creditors to inform them that you may be granted an early discharge so s/he can consider any objections they may have. If no-one objects, or if any objections are without merit, the OR can apply for an early discharge.

Note than when you're declared bankrupt you have to immediately stop using any bank accounts or credit cards that you might have. You can open a new bank account immediately after being declared bankrupt but it makes sense to withdraw enough cash to see you through the next month before you present your petition.

Obviously your credit rating will be ruined but you're not allowed to borrow more than £500 without declaring that you're a bankrupt anyway - and, besides, it'll have been the borrowing that probably got you into trouble in the first place so you'll want to avoid repeating the mistake! As a former bankrupt declared on our Dealing with Debt board: "Apart from the credit rating side of things, I have found the rest of my life to be quite unaffected by being a bankrupt. Life just seems to go on pretty much as it always did".

More: How to Get out of Debt | Read a Fool's blog on his own bankruptcy

All I have left is my sense of humour.
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