How to go Bankrupt

Going bankrupt may not be your only option...

If you have a debt problem, you might have a number of options for sorting it out. One of these is to go bankrupt. To go bankrupt you have to apply to a court. Once you have been made bankrupt, you don't have to deal with the people you owe money to.

An official called the Official Receiver or trustee takes control of your money and property, and deals with your creditors. Remember, to go bankrupt might not be your only option and it might not be the best one for you

• Bankruptcy information centre
• Bankruptcy FAQ
• Disadvantages of Bankruptcy
• How to File for Bankruptcy
• Avoid Bankruptcy with an IVA or Debt Management programme
• The Effects of Bankruptcy
• UK Bankruptcy Law

Anyone can declare themselves Bankrupt under UK law, provice the meet the following criteria:

1. You are domicile in the UK. I.e. You have a UK passport and a UK correspondence address (this could be a family member).
2. The majority of your debt was taken while living in the UK.
3. You are able to afford to pay the associated Court Fees which are c£475 (payable in cash to the Court Clerk on the day you present your Petition). Note, if you are receiving certain benefits, you may be eligible for a reduction in these fees.

To go bankrupt you need to follow the below procedure

1. Identify Your local County Court and Tel Number
   To declare Bankruptcy, you will have to present your Bankruptcy application documents (petition documents) in person at the County Court local to where you live. The local Court can be identified through the telephone book, directory enquiries or by searching on the Court Finder web site: http://www.hmcourts-service.gov.uk/HMCSCourtFinder/. If you live in London, you may have to present your documents at the Royal Courts of Justice located in the Strand.
2. Contact Your Local County Court and Request Application Forms
   Telephone your local County Court and confirm that you are considering Bankruptcy. Check whether you are speaking to the correct Court location based on your home address. This is important as you must present your Petition for Bankruptcy at the County Court local to your place of residence.
   
   You should then ask the Court to post you the necessary application forms for Bankruptcy and associated information. You will need two documents:
   • Bankruptcy Petition (doc 6.27)
   • Statement of Affairs (doc 6.28)
3. The Court will post blank copies of these documents to you free of charge. Alternatively, these forms can also be downloaded from the internet using the following website links:
   • http://www.hmcourts-service.gov.uk/courtfinder/forms/form6-27_0602.pdf
   • http://www.hmcourts-service.gov.uk/courtfinder/forms/form6-28_0405.pdf
4. Confirm the Court Fee
   The deposits for presenting bankruptcy and winding up petitions have increased with effect from 6 April 2008. Details in the following publications are affected: 
   The new deposits are: 
   

   Deposit Type	Old fee	New fee
   Debtor’s bankruptcy petition deposit	£335	£345
   Creditor’s bankruptcy petition deposit	£400	£415
   Winding up petition deposit	£670	£690

5. Confirm Whether You Need to Book an Appointment
   When you speak to the Court, it is important to ask whether you will need to make an appointment or whether you can just turn up at any time. Different Country Courts have different procedures. If you need to book an appointment you may have to do so quite far in advance.
   
   If you live in London and are planning to attend the High Court in the Strand, you will normally not need a prior appointment. You can just turn up on the day. 
6. Complete your Bankruptcy Petition and Statement of Affairs Documents
   The Bankruptcy Statement of Affairs forms are 30 pages in length. They need to be completed fully and correctly. This will normally take quite some time. Once completed, you should make 2 photocopies as forms need to be submitted to the Court in triplicate. Normally there will not be any facilities at the Court for you to do this.
7. Present Your Completed Application Form at Court
   Once you have completed your forms, you must take them, together with your Bankruptcy fee, in person to your local County Court. You should ensure that you arrive no later than 9.30 to ensure the process can be completed the same day.
8. Once at court the following will happen:
   • A Clerk of the Court will take your fee, ensure that your application forms are correctly completed and witness your signature on the Petition Document.
   • You may then meet privately with a District Judge. The Judge will ensure that you eligible for Bankruptcy (i.e. insolvent) and will determine whether Bankruptcy is appropriate. If the Judge agrees with the Petition, they will declare you Bankrupt the same day.
   • You may be asked to visit the Official Receiver. This may either be arranged for the same day or you may have to make a face to face appointment or telephone appointment at a future date.
9. What will happen at court
   The Court will either hear your petition straight away or arrange a time for the Court to consider it.
   If English is not your first language and you need an interpreter, the Court will not be able to help you find one. You will have to do this yourself and pay interpreter's fees.
10. At the hearing the Court can do one of four things:
    1. Stay (delay) the proceedings - often because the Court needs further information before it can decide whether to make a bankruptcy order.
    2. Dismiss the petition - perhaps because an administration order would be more appropriate.
    3. Appoint an Insolvency Practitioner - if the Court thinks that an Individual Voluntary Arrangement would be more appropriate. This will only be possible if your assets are more than £2,000; your unsecured debts are less than £20,000; and you have not been bankrupt or made an Individual Voluntary Arrangement in the previous five years. If you do not wish to enter into such an arrangement, you should inform the Court
    4. Make a bankruptcy order. You will be bankrupt the moment the order is made by the Court.

As well as a bankruptcy order, the Court may issue a certificate of summary administration - as long as your unsecured debts are less than £20,000 and in the previous five years you have not been bankrupt or made an Individual Voluntary Arrangement with your creditors. If the Court issues this certificate, it will make the administration of your bankruptcy quicker and simpler.

The Official Receiver will then be your Trustee in bankruptcy (see below) and you will automatically be freed from bankruptcy (known as 'discharged') two years from the date of the bankruptcy order. (If a certificate of summary administration is not made, your discharge from bankruptcy would usually be three years from the date of the bankruptcy order.)

Meeting the official receiver

Once you have been declared Bankrupt by the District Judge, you may then have to meet with the Official Receiver (OR). The Official Receiver will study your application forms in more detail. Based on this information, they are responsible for deciding decide how your Bankruptcy will be dealt with:

The Official Receiver will decide the following things:

• How long the Bankruptcy will last. This will normally be 12 months although the Official Receiver has discretion to shorten or lengthen this.
• If you can afford to make a monthly payment towards your debt and if so how much (known as an Income Payment Order which will normally last 36 months).
• If you have any assets or property, how these will be treated. I.e. if and when they will be sold to realise the asset value for the creditors

If you would like any further information and advice about how to go bankrupt law and the possible alternatives to bankruptcy, please contact The UK Insolvency Helpline bankruptcy team on 0800 074 6918. The service can advise on all aspects of bankrupt law including the Disadvantages of being Bankrupt, How to File to go Bankrupt, How to Avoid going Bankrupt and the Effects of going Bankrupt.

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