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Bankruptcy – Frequently Asked Questions
A. If you want to go bankrupt then you file for personal bankruptcy under what is known as chapter 7 at your local court. When you do this the petition has to be approved by a judge, then you need a solicitor to help you get together the papers you need to submit. If you owe someone more than £750 and they think you are not going to pay then they can make a petition for the court to declare you bankrupt. If your creditor does this then you should cooperate with the court during the procedure.
Q. How much does filing for bankruptcy cost ?
A.You have to pay £120 to the court. The fee may be waived if you are on benefits. Everyone, in spite of their circumstances, has to pay £250 deposit for the administration of bankruptcy. When you have your papers ready you have to swear that the information you´ve provided on your affairs is true. If you do this in the London High Court or in front of a solicitor it costs £7 but it is free in a County Court. If your business has failed and you have a business partner you can ask to file together under the Insolvent Partnerships order of 1994. You have to pay the fees into the court in cash or by postal order as the court won´t accept a cheque from you.
A. Bankruptcy orders can be made in the County Court near your home or in the High Court. If someone else petitions for you to be made bankrupt, this can happen even if you are abroad.
Q. What happens next?
A. Petitions are heard as soon as possible allthough this could be delayed if the court needs more information. The judge may not accept the filing if he or she thinks that other debt resolving methods such as an Individual Voluntary Arrangement would be better. This can only happen if you have not had an IVA or filed bankruptcy in the last five years.
The judge will appoint a trustee if bankruptcy is agreed and if you are a home owner then that, as well as everything else you own will be auctioned off by the trustee to pay what you owe. A bankruptcy order can last as long as 3 years, you won’t be able to have a bank account and your credit file will be seriously affected for a long time.