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Bankruptcy and Atlantic's Bankruptcy Assistance Service

Will Bankruptcy be suitable for me?

Atlantic Financial Management offers a Bankruptcy Assistance service for clients in England & Wales through its panel of independent Insolvency Practitioners. The bankruptcy process in Northern Ireland is different and rarely used by consumers. The bankruptcy process in Scotland is different and is called Sequestration.

There were 20,383 individual insolvencies in England and Wales in the first quarter of 2016. The number of bankruptcies was the lowest since quarter 4 of 1990. There were 3,744 bankruptcy orders in the first quarter of 2016, 10.8% lower than the same quarter of 2015. However, the introduction of Debt Relief Orders (DROs) in 2009 and more recently the change to DRO eligibility criteria are likely to have affected the number of bankruptcies. About a quarter of DROs in the first quarter of 2016 involved qualifying debts greater than the previous DRO threshold of £15,000.

Bankruptcy is a serious matter and requires careful consideration and professional advice, especially if you have any assets that may be at risk like the family home or your pension. Bankruptcy will always be a consideration when reviewing the available debt remedies available to you. There are a number of alternatives to bankruptcy that Atlantic offer and these are discussed more widely in the debt solutions section of our site.

A court makes a Bankruptcy Order only after a bankruptcy petition has been presented. It is usually presented either:

  • by yourself (debtor's petition); or
  • by one or more creditors who are owed £5,000 or more by you and that amount is unsecured (creditor's petition).

Of the 3,744 bankruptcies in the first quarter of 2016, 2,637 (just over 70% of all bankruptcy cases) were debtor petition bankruptcies. This is 84% lower than the peak in the second quarter 2009. The level of debtor petition bankruptcies has been following a generally decreasing trend since the beginning of 2009. In the fourth quarter of 2015 there were 932 bankruptcies where the individual was self-employed. The rate of decrease in bankruptcy orders has generally been less rapid for self-employed individuals than for others. This means that the proportion of bankruptcy orders where the individual was self-employed is higher than it has been in earlier years.

Useful link: https://www.gov.uk/bankruptcy

A bankruptcy order can still be made even if you refuse to acknowledge the proceedings or refuse to agree to them. You should therefore co-operate fully once the bankruptcy proceedings have begun. If you dispute the creditor's claim, you should try and reach a settlement before the bankruptcy petition is due to be heard. The Insolvency Service 'Guide to Bankruptcy' explains that trying to do so after the bankruptcy order has been made is both difficult and expensive.

Atlantic's Bankruptcy Assistance Service

For clients in England & Wales, where Bankruptcy is agreed to be the best debt solution for you then we will offer expert advice on:

  • The Bankruptcy Process
  • Period of Bankruptcy
  • The effects of Bankruptcy
  • Bankruptcy Restriction Orders 'BRO', where applicable
  • Preparing the debtors petition paperwork
  • Arranging the court date
  • Checking the Bankruptcy Order has been correctly established on your credit file

Your obligations in Bankruptcy

  • You must comply with requests to provide information about your financial affairs. You may be requested to attend an interview - the court will give you the address of the official receiver. (Note: usually before the interview, you will be sent or given a questionnaire which you should fill in as fully and accurately as possible.) It is likely that you will be asked to complete a questionnaire;
  • a full list of your assets and details of what you owe and to whom (your creditors);
  • maintain and then hand over your assets to together with all your books, records, bank statements, insurance policies and other papers relating to your property and financial affairs;
  • inform your Trustee about assets and increases in income you obtain during your bankruptcy;
  • stop using your bank, building society, credit card and similar accounts straightaway;
  • not obtain credit of £500 or more from any person without first disclosing the fact that you are bankrupt;
  • not make payments direct to your creditors.

Dealing with your creditors

The Insolvency Service has published a guide entitled 'In debt? Dealing with your creditors' that is designed to provide an impartial source of information for anyone looking to tackle their debt problems, either themselves or with the support of debt advice and insolvency professionals.

You may have already had firsthand experience of trying to negotiate with your creditors when you became aware that you couldn't meet contractual payments going forward or you have already tried one or more debt remedy that may not have worked for you.

We have used some of the guidance to reflect the key questions that form part of the Pros and Cons section of each debt solution that Atlantic offer, in some instances through preferred partners.

What to consider when deciding which debt remedy is best for you

  • On completion, does it free you from all or part of your debts so that your creditors will have no further claim against you?
  • Is it binding on all your creditors?
  • How long will it last?
  • Will it affect my employment?
  • Will it affect my credit rating/score?
  • Will my home be at risk?
  • How does any fee I pay to Atlantic affect the outcome of the debt solution?
  • Will 'priority debts' be put before others? Priority debts are, for example, utilities, rent, court fines, council tax, maintenance payments and income tax
  • Is the debt solution sustainable? Is there anything on the horizon that will require an alternative solution to be considered?

Atlantic has excellent relationships with the leading lenders, credit granters, debt buyers, debt recovery agencies and leading litigation solicitors. All of these are generally members of trade associations that operate to strict codes of conduct and the Financial Conduct Authority Consumer Credit Sourcebook.

Creditors and their agents will extend an initial breathing space of at least 30 days (with the possibility of extension where demonstrable progress is being made but is not yet complete) once we have notified them of our appointment in handling your bankruptcy petition. The breathing space will include the suspension of all collections activity relating to the debts under consideration in the Bankruptcy Order. Extended breathing space may be required if you are likely to struggle to pay the bankruptcy costs of £680 – which is per applicant (individual).

Creditors and their agents generally fully and constructively co-operate with debt solution providers like Atlantic and provide all relevant and reasonably requested material within 10 working days of receipt of such a request where we can demonstrate your informed consent.

Legal notices should not be ignored and we do need to be notified of balance updates or statements showing interest or charges being applied to your accounts.

Important points to consider before entering a Bankruptcy Order

  • Your Bankruptcy Order is entered on a public register which can be found at http://www.insolvencydirect.bis.gov.uk/eiir/
  • Your credit rating will be adversely affected – whilst you may be discharged after 12 months the effect on your credit rating will last 6 years
  • Your family home may be put at risk
  • Your pension and other assets may also be taken into consideration
  • A petition can be presented against you even if you are not present in England or Wales at that time. This can happen when you normally live in, or within the previous 3 years have lived or had business connections in England or Wales
  • Once the Bankruptcy Order has been made the Official Receiver will give notice of the order in the 'London Gazette', which is an official publication that contains legal notices

The fees involved in the Bankruptcy Assistance service

Court Fees and Deposits

For clients in England & Wales, where Bankruptcy is agreed to be the best debt solution for you then we will refer you directly to our chosen licensed Insolvency Practitioner, as we do not have an in-house Insolvency Practitioner. We operate a panel of Insolvency Practitioners covering all legal jurisdictions.

We can offer expert advice on:

  • The bankruptcy process
  • The period of bankruptcy
  • The effects of bankruptcy, particularly on your employment and your assets
  • Bankruptcy Restriction Orders (BRO), where applicable

We charge a fee of £250 for this service, which includes the time of our personnel in preparing the debtors petition documentation with you. This fee excludes the bankruptcy costs in England and Wales. You will pay £680, made up of:

  • £130 fee to the adjudicator
  • £550 to the Official Receiver

You would be responsible for the Adjudicator Fee and the Official Receiver’s Deposit irrespective of our involvement. Many clients struggle to pay these as a single payment and we often need to negotiate with creditors to allow a ‘moratorium’ where token payments are made to the creditors whilst these costs are paid. Note that the adjudicator fee and deposit apply per individual.

You will normally be discharged within 12 months of bankruptcy proceedings being concluded, though it is increasingly common to have to continue making contributions to the Official Receiver for a further 2 years if you have surplus disposable income through a formal payment arrangement.

Please speak to one of Atlantic's experienced debt advisers to determine the most appropriate debt solution to your circumstances or complete the contact form.