How the bankruptcy process works

First steps

Get legal or financial assistance. Go to a Citizens Advice Bureau, a solicitor, a qualified accountant, an authorised insolvency practitioner, a reputable financial adviser or a debt advice centre.

File your bankruptcy petition at your local county court or at the High Court in London. Creditors may also file bankruptcy proceedings against you and your refusal to acknowledge the petition will not stop it from happening. However, you may reach a settlement before the petition is heard. Doing this after the order has been made will be difficult and expensive.

Publication and court costs

The London Gazette and local or national newspapers publish all bankruptcy orders. The local authorities, utility suppliers and courts receive written notice of all these orders.

The costs of administering your bankruptcy are about £310 and the court fees are usually about £140. Those on income support might be exempted from the last cost.

The receivers and how they deal with assets and debts

Your receiver will administer your bankruptcy, liquidate the needed assets and pay your creditors. Any earnings or assets you receive after the bankruptcy order has been made will go to your creditors via the receiver. Sometimes an insolvency practitioner is appointed, and not an official receiver. The insolvency practitioner disposes of your assets, takes payment for the procedure and pays your creditors.

Bankrupts do not control their own finances; their receiver or trustee does this for them. You many only keep tools, books, vehicles or other equipment that is needed for personal use, employment or business. These items include your clothing, bedding, furniture and basic household equipment.

Your trustee is the only person with whom creditors should deal after the bankruptcy order has been made. The two exceptions are mortgage lenders and court fines: mortgage lenders may sell your property if payments are not made. You will be responsible for debts you make after the bankruptcy order has been made.

Day-to-day debts

Utility suppliers may not demand payment for bills that were unpaid at the bankruptcy order date but they may ask you to pay a deposit towards further supplies.

What are the restrictions?

  1. You may not try to get credit for more than £250 without telling the creditor you are bankrupt.
  2. You may not trade in a different name without telling the other parties the name in which you were made bankrupt.
  3. You may not form or manage a limited company or act as a director without the permission of the court.
  4. You may not be an MP, JP, school governor or the trustee of a charity or a pension fund.
  5. You may not have an overdraft without informing the bank of your bankruptcy. You may also not write cheques that may be dishonoured.
  6. Your trustee should know about any excess money you have in your account.