Voluntary bankruptcy

Voluntary bankruptcy is the legal proceeding that follows a petition of bankruptcy

How much does it cost to declare voluntary bankruptcy?

The deposits for presenting bankruptcy and winding up petitions have increased with effect from 6 April 2008.

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

Please note that these are the prices for a single bankruptcy. Husbands and wives must apply separately. If you have traded as a partnership within the last 3 years you can apply for a joint voluntary bankruptcy.

How much do you have to owe before you can apply for voluntary bankruptcy?
There is no minimum. However, if a creditor wants to make you bankrupt he can only do so if you owe at least £750. Two or more creditors can join together if they are owed more than £750 in total.

What will happen to your income if you file for voluntary bankruptcy?
Your earnings are not taken over automatically as a result of voluntary bankruptcy. Most people applying for voluntary bankruptcy have no money left over after paying essential living expenses, and so none of their earnings are taken to pay creditors. However, if the Trustee believes that you can afford to make payments towards your debts, you will be expected to make monthly payments during the period of the Bankruptcy.

How do I apply for voluntary bankruptcy?

1. Collect, or ask the Court to send you, a “voluntary bankruptcy petition” and make an appointment for your application to be heard.
2. Complete the "statement of affairs" form which is issued with the voluntary bankruptcy petition. This entails providing information as regards your income, expenditure, details about your creditors and your assets.
3. Go to the County Court dealing with bankruptcy at the appointed time – try to be a little early to give yourself time to complete the formalities in the General Office before seeing the District Judge. The initial stages are very informal, usually conducted by a clerk at the County Court.
4. The County Court District Judge will hear your petition and will make an order for bankruptcy there and then if there is no way you can pay your debts.
   District Judges do not have to grant an order for Bankruptcy and a petition may be refused. After a refusal you must wait at least a year before applying again. If Bankruptcy is refused the deposit (£250) part of the costs will be refunded, but not the fee (£120).
5. You will be bankrupt from the moment the District Judge makes the bankruptcy order. What happens next? The County Court will contact the Official Receiver's Office and ask you to go round there immediately.

What debts can be included on my bankruptcy?
All debts, including Income Tax, Council Tax, Gas, Electricity, Water, Mortgage and Rent arrears must be included as well as credit debts such as bank loans, overdrafts, credit cards, catalogues and HP agreements.

Further questions on voluntary bankruptcy

• What is voluntary bankruptcy?
• Voluntary Bankruptcy explained
• The voluntary bankruptcy process
• The effects of voluntary bankruptcy
• The disadvantages of voluntary bankruptcy
• How do I petition for my own bankruptcy?
• What happens after bankruptcy?
• What are the alternatives to voluntary bankruptcy?

If you would like any further information and advice about voluntary bankruptcy and the possible alternatives to voluntary bankrupt, please contact Money Advice Direct bankruptcy team on 0800 074 6918. The service can advise on all aspects of bankruptcy law including the Disadvantages of Bankruptcy, How to File for Bankruptcy, How to Avoid Bankruptcy and the Effects of voluntary Bankruptcy.

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