No Asset Procedure Affects:
Your assets
You must tell the Official Assignee about all your assets. If youre applying for a NAP and have a KiwiSaver account or superannuation policy, you must tell the Official Assignee who the fund is with and what the current value is.
If you have a KiwiSaver or superannuation fund that you can access within the next three years, you may not be able to enter a NAP.
If you withdraw funds under the hardship provisions during your NAP, your NAP may be terminated because that money could be used to pay your creditors.
Excluded debt and your student loan
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excluded debt, in relation to a debt repayment order or the no asset procedure, means
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any amount payable under a maintenance order under the Family Proceedings Act 1980; and
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any amount payable under the Child Support Act 1991; and
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any student loan balance
Suspended Income Tax Payments
HMRC will apply a nil tax code when youre bankrupt. This tells your employer not to take any further income tax from your wages for the rest of the tax year . The extra money in your pay that results from this can be claimed by the trustee to form part or all of an IPA or IPO. If the IPA or IPO is wholly paid out of this extra income, it will stop when you start paying tax again.
The NT wont tell your employer youre bankrupt as an NT can be applied for a number of reasons.
What Happens To Your Home
If you own your home it can be sold if it is the only way to pay your creditors.
Sole owners
If youre the only owner of the property:
- the value of the property after any secured debts have been paid transfers to the trustee. This is known as the beneficial interest and is sometimes called equity
- the legal title transfers to the trustee and a bankruptcy restriction is added to the land registry record. This will stop you from selling your home or making deals connected to it
The restriction will be removed once the trustee has been paid for their interest in the property.
Joint owners
If you own the property with someone else:
- your share of the property after any secured debts have been paid transfers to your trustee. This is known as the beneficial interest
- a Form J restriction is added to your Land Registry record and the trustee will be told of any deals affecting the property, including a sale
You can still sell the property, but the trustee will get your share of the money from the sale. The Form J restriction will be removed once the trustee has been paid this money.
The sale of your home
The trustee cant usually sell the property without your agreement for a year from the date of the bankruptcy order if you have a partner or children living with you.
You can stop a sale taking place later if a family member or friend buys the beneficial interest in your home. The buyer should contact the trustee.
Rented property
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What Happens To Your Motor Vehicle
Your motor vehicle will be sold to pay for your bankruptcy debts, unless you need it:
- for your work or vocation
- to meet basic domestic needs where alternative transport is not practical
If the official receiver agrees you need the vehicle, it will be classed as exempt and not included in your bankruptcy. This does not apply if you own your vehicle through an ongoing hire purchase agreement .
If you are allowed to keep the vehicle you remain responsible for road tax, MOT and insurance.
If your vehicle is exempt but valuable it can be replaced with a cheaper alternative. The official receiver will use the money from the sale to either pay for the new vehicle directly or give you the money to buy one. You must provide proof of purchase for your new vehicle within 1 month. The guide price for a replacement is £1,000.
Stop the sale of your vehicle
If your vehicle is not exempt you may be able to keep it if a third party can pay to transfer it to them for you and you provide a:
- current insurance certificate
- vehicle registration document
- a valid MOT
The price paid will be the market value of the vehicle but must at least cover the agents costs for the sale of the vehicle.
If you dont want to keep the vehicle the official receiver will dispose of it.
Vehicles under finance agreements
A finance agreement can be a:
- hire purchase
- conditional sale
- leasing agreement
If the trustee decides they wont be claiming the vehicle they will give notice to you and the finance company.
What Can’t I Do While Bankrupt
When youve been declared bankrupt, you are forbidden from doing any of the following:
- Directing a company
- Starting or managing a company without the consent of the court
- Managing a company under a different name without informing those you do business with that you are currently bankrupt
- Working as an insolvency practitioner
- Taking a loan out worth over £500 without informing the lender or your bankruptcy.
It is important to note that breaching any of these restrictions is a criminal offense and doing so can result in prosecution.
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Why You Might Get A Bro
Examples of behaviour that can lead to a BRO include:
- giving away assets or selling them for less than their value
- paying some creditors in preference to others
- borrowing money that you know you cant repay
- neglecting your business so that your debts increase
- not cooperating with the official receiver
- behaving fraudulently eg giving false details to obtain credit
This is not a complete list. Any dishonest or blameworthy behaviour could lead to a BRO. The court may consider conduct that occurred before or after your bankruptcy order.
Being bankrupt for a second time in six years is also a matter to be considered but is not, in itself, sufficient reason to apply for a BRO.
The fact that you have done one of these things doesnt mean that you will be automatically subject to a BRO, but it does mean that the official receiver needs to look at the conduct and decide whether the public needs protection.
Status Of Certain Defined Benefit Pension Plan Liabilities In Bankruptcy
The Pension Benefit Guaranty Corporation , a U.S. government corporation that insures certain defined benefit pension plan obligations, may assert liens in bankruptcy under either of two separate statutory provisions. The first is found in the Internal Revenue Code, at 26Â;U.S.C.Â;§Â;412, which provides that liens held by the PBGC have the status of a tax lien. Under this provision, the unpaid mandatory pension contributions must exceed one million dollars for the lien to arise.
The second statute is 29Â;U.S.C.Â;§Â;1368, under which a PBGC lien has the status of a tax lien in bankruptcy. Under this provision, the lien may not exceed 30% of the net worth of all persons liable under a separate provision, 29Â;U.S.C.Â;§Â;1362.
In bankruptcy, PBGC liens generally are not valid against certain competing liens that were perfected before a notice of the PBGC lien was filed.
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The Individual Insolvency Register On Annulment
Once notice of the annulment is received your bankruptcy will be removed from the Individual Insolvency Register after:
- 28 days if the bankruptcy order shouldnt have been made
- 3 months if the debts were paid in full or an IVA has been agreed
If an IVA has been agreed, details of this will appear on the register.
How Can Debt Negotiators Help With Bankruptcy Solutions
At Debt Negotiators, we understand the impact that filing for bankruptcy in Australia can have and well investigate all other avenues of debt solutions before we recommend this.
However, if we have exhausted all other viable solutions for your debt repayment and management, you may have to file for Bankruptcy. Debt Negotiators can advise you throughout the process of filing for Bankruptcy and will help you to rectify your financial situation.
Our expert consultants are here to offer expert advice, guidance and support for those suffering from financial hardship and are dedicated to rectifying your situation by other means.
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Who Deals With Your Bankruptcy
An Official Receiver is appointed to protect your assets. They act as trustee of your bankruptcy affairs if you have no assets.
If you have assets, an Insolvency Practitioner will be appointed to act as trustee and sell your assets to pay your creditors. To read more, go to:
Once a bankruptcy order has been made against you, your creditors cannot pursue you for payment. The trustee is responsible for payments.
Apply For Consent From The Official Assignee
You must apply to the Official Assignee for consent to:
- leave the country, even if it’s just temporarily.
- be self-employed, or involved in the running of any business your application needs to include details of an independent person with financial experience who has agreed to monitor your financial affairs and make sure that you meet all your tax and financial obligations. You must include a letter from them confirming this. You are considered to be self-employed if you are responsible for paying income tax, GST, ACC or any other tax for yourself or any employees; if you are paid on commission ; or if you pay withholding tax eg if you are a building contractor or real estate agent. You are considered to be involved in management if you are involved in decisions or policies about the finances or business of the company, or if you do more than carry out decisions as an employee. If you are unsure, please ask your Insolvency Officer.
- be employed by a relative . A relative includes your parent, spouse, child, brother, or sister, and also your spouses parent, child, brother, or sister. And your spouse includes your husband, wife, and de facto or civil union partner.
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A Creditor Making You Bankrupt
Your creditors can present a creditor’s petition if you owe them an unsecured debt of over £5,000. This may be the sum of two or more debts which total over £5,000. There might;be different petitioning creditors on the same petition for;different debts you owe.
Once bankruptcy proceedings have started, you must co-operate fully even if it’s a creditor’s petition and you dispute their claim. If possible you should try to reach a settlement before the petition’s due to be heard – doing it later can be difficult and expensive.
How Does Bankruptcy Affect My Employment
Your bankruptcy may prevent you from undertaking employment in certain occupations or holding various licences. We advise that you contact any professional bodies that you are registered with to ensure that there are no restrictions in continuing your employment in the event that you become bankrupt. Your employer is not normally notified of your bankruptcy unless you owe him/her money or unless you have failed to pay compulsory contributions. It is still your responsibility to lodge taxation returns.
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What Happens If I Don’t Co
You must co-operate fully with the official receiver, as well as the bankruptcy trustee, if this is a different person. If you don’t, they can apply to the court for any or all of the following: an order for you to attend a public examination an arrest warrant if you’ve failed to attend a public examination. an order to have your mail redirected to the trustee for you to become subject to a bankruptcy restrictions order. an order for your discharge from bankruptcy to be suspended. You may also be prosecuted for failing to co-operate, or for offences you committed before the bankruptcy.
When Can It Be Made
The official receiver can only apply for a bankruptcy restriction order prior to your formal discharge from bankruptcy. This will automatically occur after 12 months, unless the official receiver has applied for your discharge to be suspended, which will often be the case if you have not cooperated with their investigations.
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How Long Does A Chapter 7 Bankruptcy Stay On Your Credit Report
After you file for a Chapter 7 bankruptcy, it remains on your for up to ten years and youre allowed to discharge some or all of your debts. When you discharge your debts, a lender cant collect the debt and youre no longer responsible for repaying it.
If a discharged debt was reported as delinquent before you filed for bankruptcy, it will fall off of your credit report seven years from the date of delinquency. However, if a debt wasnt reported delinquent before you filed for bankruptcy, it will be removed seven years from the date you filed.
Newfoundland & Labrador Bankruptcy Exemptions
In Newfoundland and Labrador, property exempt from seizure in bankruptcy is set by the provincial government and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.
Example: If you have a car worth $6,000 and you still owe $4,000 on the loan, the equity you have in the car is $2,000. In Newfoundland and Labrador, the exemption for a car is $2,000. In this case, you would be entitled to keep the car and your unsecured creditors cannot take this from you when you file for bankruptcy.
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Bankruptcy Exemptions In Newfoundland And Labrador
- Food and fuel required by you and your dependants for 12 months
- Clothing for you and your dependants up to $4,000
- Household furnishings and appliances up to $4,000
- One motor vehicle up to $2,000
- No limit on medical and dental aids for you and your dependants
- Items of sentimental value up to $500
- All pets are exempt from bankruptcy
- Up to $10,000 of equity in your home
- Tools of your trade or business up to $10,000
- Certain income and pension plans
D What Happens If A Bankrupt Breaches A Bankruptcy Restrictions Order
If a bankrupt contravenes a bankruptcy restriction order they may be prosecuted and, if found guilty by the court, can be liable to a criminal penalty such as a fine or imprisonment.
In addition, if a bankrupt takes part in in managing a limited company without the permission of the court, whether as a director or not, they can be found personally liable for any debts of the company that arise whilst they are managing it.
We can assist individuals by both defending a bankruptcy restrictions order and negotiating the period of the bankruptcy restrictions order.
If you are bankrupt and the Official Receiver has contacted you regarding the making of a bankruptcy restrictions order please do not hesitate to contact us should you require any assistance
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Key contact:
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How Can I Rebuild My Credit File After Bankruptcy
The good news is that bankruptcy isn’t the end of the road financially. Here are some steps you can take in the short term:
- Order a copy of your statutory credit report to ensure your credit details are correct
- Add a short statement to your report explaining why you got into debt
- Register for the electoral roll at your current address
- Update all personal details on your credit profile
In the long term, it’s important to show lenders that you can borrow money responsibly. You can do this by using and repaying credit. But before you do so, you need to be 100% sure you can afford and meet the repayments.
- Consider credit designed for people with low credit ratings. This usually means low limits and high interest rates. You may be able to improve your rating by using this type of credit for small purchases and repaying the money in full and on time.
- Space out your applications. Each application for credit will leave a mark on your credit report, so aim to apply no more than once every three months.
- Check your eligibility before you apply for credit. Doing this can help you reduce your chances of being rejected and having to make multiple applications. You can see your eligibility for credit cards and personal loans when you create a free Experian account.
Discharge And Your Business
After discharge you can carry on a business without the restrictions that applied during your bankruptcy.
You can act as a director of a limited company or be involved in its management .
You will be able to obtain credit without having to mention your bankruptcy but you will want to ensure that you can repay it.
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Can You Improve Your Credit Score After Bankruptcy
There is no quick fix to restoring your credit score and credit rating after bankruptcy, but there are general steps you can take to improve your credit score. Consumer Action Law Centre cautions that Australians in debt may be at risk from debt vultures, with approximately 1.4 million to 1.9 million Australians paying for debt management or credit repair services in the 12 months to December 2020. These companies are almost entirely unregulated and can target Australians who are in financial hardship with debt advice and services, CALC says.;
