What Happens To Your Assets After Discharge
Assets that are part of the bankruptcy stay under the trustees control when your bankruptcy ends. It can take time for all assets to be dealt with.
You must keep making any payments agreed under an IPA or IPO.
Your family home
If your family home has not been dealt with 3 years after the bankruptcy order, the interest may be given back to you.
If the interest in your family home is returned to you, the Land Registry will be told that the property is no longer part of your bankruptcy estate. The trustee will send notice to the Land Registry and the restrictions will be removed.
The restrictions on your business end when bankruptcy ends, unless the official receiver feels youve been dishonest. They can then apply to extend the restrictions
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.
Interview With The Official Receiver
After you have been made Bankrupt you will have an interview with the Official Receiver. An examiner from the ORs office will contact you within a few days to arrange this.
When you first speak to the Official Receiver they usually just want to introduce themselves and confirm a mutually convenient for the interview. The interview itself will normally take place over the telephone and last around 1 hour.
During the interview you will be asked questions about your financial situation. Following this. a decision will be made about how to deal with any assets you own and whether you will have to pay anything towards your debts.
If you are self employed the Official Receiver may want to interview you face to face. They will request that you travel to one of their regional offices to do this.
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What Changes When My Bankruptcy Is Discharged
Once your bankruptcy is discharged, you will be free of your debts. However, there are some exceptions:
- Debts gained by fraud
- Court fines
- Debts created after the bankruptcy order
You may also find that the value of assets you own when you are declared bankrupt will still be used to repay debts after this point. For example, the official receiver has up to three years to decide what to do with the equity in your property.
One key change that comes with your bankruptcy being discharged is that you can borrow more than £500 without having to tell the lender about your bankruptcy. Just remember, though, that if a lender conducts a credit check, it will still appear on your credit report for six years after being discharged.
Another change is that you will be eligible to become a company director again if you so wish.
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.
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What If You Have To Make Payments Towards Your Debts
After you go bankrupt the Official Receiver will review your income and living expenses budget. If you have any surplus income you will be required to pay this towards your debts.
The payment is made in the form of an Income Payment Agreement . This runs seperately from your Bankruptcy and once issued will last for 3 years.
An IPA can be set up at any time during the 12 months you are Bankrupt. It may be that you could not afford to make payments at the beginning. However if your financial situation improves you will be asked to start an IPA from that point. It will then last for 3 years.
You will be discharged from bankruptcy after 12 months even if you have an IPA. However you still have to continue making the agreed payments for 3 years from the date they started.
How Long Will Payments To Your Creditors Last After Bankruptcy
Once you are bankrupt the Official Receiver will review your income and living expenses. If you have any disposable income you will normally be asked to pay this towards your debts. It is known as an Income Payment Agreement .
An IPA will last for three years. In other words the payments continue after you are discharged from Bankruptcy itself. This is possible because Bankruptcy and the IPA are governed by two separate agreements.
If you have an IPA and your income improves you must tell the OR. As a result your payments may increase. You must inform the OR of changes during your IPA even if you have already been discharged.
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Why Does Bankruptcy Affect Your Position As A Beneficiary
When a person is declared bankrupt, a trustee is appointed by the bankruptcy courts on their behalf. The role of the trustee is to take charge of the bankrupt persons finances during the period of the bankruptcy order.
They do this in two ways:
A bankrupt person is required by law to disclose details of any income during this time to the trustee. That income would then need to go directly to the trustee for them to manage as per the bankruptcy order.
If a person who had been declared bankrupt was due to receive an inheritance while the bankruptcy order was in place, the inheritance would need to go straight to the trustee.
Its important to note that bankruptcy would only affect a beneficiarys ability to inherit if they were under a bankruptcy order when the testator dies, or if they were declared bankrupt in the period between the testator dying and their estate being finalised.
If a person became a beneficiary after they had been discharged from bankruptcy their ability to inherit would not be affected.
What Happens To Your Pension
Most pension schemes arent included in your bankruptcy and they cant be claimed by the trustee.
The pension scheme must be a UK state pension scheme or a scheme approved or registered by HM Revenue & Customs. Approved or registered pension schemes are usually:
- occupational pension schemes approved for tax purposes
- personal pensions approved for tax purposes
- stakeholder pensions
- retirement annuity contracts
If your pension scheme is not an approved or registered scheme you may be able to exclude it from your bankruptcy by:
- applying to the court for an exclusion order, or
- making a qualifying agreement
If your pension is part of the bankruptcy, it can be used to make payments to your creditors.
Payments made to you from your pension scheme, including any lump sums, before the end of your bankruptcy can be used as part of an Income Payments Agreement or Income Payments Order . This will involve you paying some of your debt with your income.
If you are able to take money from your pension following changes to the law in April 2015, but have chosen not to do so, the trustee may look at the value of your available pension fund. If this would give you access to enough money to make a different arrangement to pay your creditors, the trustee can ask the court to cancel the bankruptcy.
Bankruptcies before May 2000
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How Bankruptcy Affects Your Credit Score
There are a variety of organisations that can help you cope with debt, offering practical solutions, legal advice and counselling. However, sometimes you may find yourself in a position where advice is no longer enough and you need to take more serious action to deal with your debt. In this case you may need to declare personal bankruptcy. Going bankrupt can give you relief from debts, but it can also carry long-term ramifications for your finances, including your credit history.
How Does Bankruptcy Status Affect Your Credit History
Your credit history is used by lenders to judge how viable a candidate you are for particular types of credit. It includes information like your history of credit account payments, your current credit and debt status, and public records like the electoral roll.
When you are made bankrupt a note is added to your credit file, , which will stay on there for six years after you were made bankrupt. A bankruptcy can show that you are at a higher risk of defaulting on your repayments and can make it very difficult to obtain credit or to even open a new bank account.
The extent to which your bankruptcy will affect your creditworthiness and how long it will take to improve it, will depend on your particular circumstances. It will take 12 months before you are discharged from bankruptcy, during that time you may struggle to do things like renting accommodation, getting insurance or taking out direct debits . Even after you are discharged, it may still be difficult obtain these things if necessary you would need to use bank accounts designed for those that have been declared bankrupt and use specialist lenders to borrow money.
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How Long Does Information Stay On My Equifax Credit Report
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- Most negative information generally stays on credit reports for 7 years
- Bankruptcy stays on your Equifax credit report for 7 to 10 years, depending on the bankruptcy type
- Closed accounts paid as agreed stay on your Equifax credit report for up to 10 years
When it comes to credit reports, one of the most frequently asked questions is: How long does information stay on my Equifax ? The answer is that it depends on the type of information and whether its considered positive or negative.
Generally speaking, negative information such as late or missed payments, accounts that have been sent to collection agencies, accounts not being paid as agreed, or bankruptcies stays on credit reports for approximately seven years. Here is a breakdown of some the different types of negative information and how long you can expect the information to be on your Equifax credit report:
Here are some examples of “positive” information and how long it stays on your Equifax credit report :
- Active accounts paid as agreed. Active credit accounts that are paid as agreed remain on your Equifax credit report as long as the account is open and the lender is reporting it.
- Closed accounts paid as agreed. If the last status of the account is reported by the lender as paid as agreed, the account can stay on your Equifax credit report for up to 10 years from the date it was reported by the lender to Equifax.
Consumers Can Seek Chapter 7 Or Chapter 13 Bankruptcy
There are two types of bankruptcy that consumers can choose if their financial situation warrants it: Chapter 7 or Chapter 13 bankruptcy. The type of bankruptcy you choose will ultimately determine how long it remains on your credit report.
Chapter 7 bankruptcy essentially means any unsecured debt will be wiped out with certain limits and restrictions. The other type is Chapter 13 Bankruptcy, which calls for people to continue paying their debt for several years and afterward, a portion of that debt is discharged.
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Getting A Search Started
The best place to start is to search the London Gazette, on The Gazette website, by name of bankrupt. This has notices published by officials to inform creditors about their proceedings.
If you have found an entry in the London Gazette you can try looking for bankruptcy case files at the National Archives but only very few survive.
If you cannot find a case file you will need to browse various register and enrolment series that will normally only provide brief formal entries. They will confirm if a bankruptcy took place, but will not provide much detail.
From 1842 district bankruptcy courts were established for cases outside London. Case files and some bankruptcy registers from these should be at local archives. Search our catalogue using keywords, and refine your results using the filters. Alternatively, look for a particular local archive using Find an Archive.
Get A Secured Credit Card
Reducing your dependence on credit cards can be an important step toward rebuilding credit after bankruptcy. However, the strategic use of secured credit cards can also help you begin to repair your trustworthiness in the eyes of lenders.
Taking out a secured credit card requires making a refundable security deposit and then borrowing against it. While these cards tend to come with high interest rates, if they report to all three credit bureaus, theyre a great option to show responsible credit behavior until youre better qualified for a traditional card with more competitive terms.
Some secured cards even allow you to graduate to an unsecured card after consistent on-time payments. This is a benefit since you wont have to apply for a new, unsecured card when your credit improves,
Keep in mind, however, that applying for a secured card doesnt guarantee acceptance, so take time to research the providers requirements before applying. If possible, choose a provider that offers prequalification so you can see whether youre likely to qualify before agreeing to a hard credit check that can further damage your score.
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Bankruptcy In The United Kingdom
Bankruptcy in the United Kingdom is divided into separate local regimes for England and Wales, for Northern Ireland, and for Scotland. There is also a UK insolvency law which applies across the United Kingdom, since bankruptcy refers only to insolvency of individuals and partnerships. Other procedures, for example administration and liquidation, apply to insolvent companies. However, the term ‘bankruptcy’ is often used when referring to insolvent companies in the general media.
Decide If You Should Go Bankrupt
The decision to go bankrupt is not one you should take lightly. You need to understand the implications of this solution based on your personal circumstances.
In particular you need to understand the likely impact on any valuable possessions such as your house and car. You will also want to know whether you will be required to make ongoing payments towards your debts.
Speak to one of our experienced advisers who will help you analyse your financial situation and decide if Bankruptcy is right for you.
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How Discharge Affects Your Home
The official receiver has 3 years to take action in relation to your home, this means it wont be affected by your discharge. Your share in your home will become yours again if they haven’t done any of the following within 3 years from the date your bankruptcy order was made:
- sold your share to someone – like your partner, friend or family member
- applied to the court for an order that you and anyone else living in your home have to leave
- applied to the court for a charging order
- come to an agreement youll pay them the value of your share
The Difference Between Bankrupts And Insolvent Debtors
Insolvent debtors and bankrupts are different. To qualify for bankruptcy you were supposed to be a trader, making your living by buying and selling. By the late 18th century this was extended to include most skilled craftsmen. People sometimes gave false or misleadingly general descriptions of their occupations so they could qualify as a trader. The term dealer or chapman was often used. Farmers were specifically excluded but still sometimes appear in records. Partnerships of individuals could declare themselves bankrupt, but companies were not covered until after 1844.
Bankruptcy was later extended to include most skilled craftsmen.
Insolvent debtors were individuals unable to pay their debts. Only after 1861 could insolvent debtors apply for bankruptcy.
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How Can I Find Out If Someone Has Entered Bankruptcy In England And Wales
When a bankruptcy order is made, whether on a creditors or debtors petition, the fact of the bankruptcy automatically becomes a matter of public record.
In England and Wales, if you are a creditor of someone you suspect may have been declared bankrupt there are two main ways to find out if your suspicions are correct:
- It is stated in law that insolvency and bankruptcy notices must be placed in the Official Public Record, The Gazette.
- Alternatively, you can do a bankruptcy search on the Individual Insolvency Register on The Insolvency Service website.