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Your guide to applying for bankruptcy with CAP

Applying for bankruptcy

Bankruptcy isn’t as scary as it seems. It can be an important step on your journey to becoming debt free, so why don't we take a look at what's involved? We've put together some information about applying for bankruptcy. We think you might be surprised at how straightforward this can be, especially when you have CAP on your side.  

The bankruptcy process

1

Getting started

You’ll receive a letter from us explaining your insolvency advice along with a copy of the Full Client Agreement, which you need to sign and return. If your case has just been set up, your Debt Coach may have already discussed this with you

2

Paying for your bankruptcy application

It costs £680 per person to apply for a bankruptcy. This is a fee you’ll have to pay to the Insolvency Service. This is not a fee payable to CAP for our service which is, and will always be, free of charge.

3

Giving your information to CAP

At this stage, we may get in touch to ask for extra information. This will include certain paperwork depending on your circumstances. One of the things we’ll need is a pre-bankruptcy questionnaire (this is a really important form that will help us fill out your application on your behalf).

4

Completing your online application

We’ll help you to complete your application online. We’ll arrange a time to call you so we can go through it together and explain what you need to do next.

5

Submitting your online application

Once you’re happy with your application you’ll need to submit it. To do this you may need to confirm your identity by following the steps to use the Verify government system. If you’ve registered with Verify before, you won’t need to register again. Please let CAP know when you have submitted your form.

6

The Official Receiver

After the bankruptcy has been granted, you’ll be given an appointment for a phone interview with the Official Receiver. Their role is to work on behalf of the Insolvency Service and the Courts to administer your bankruptcy. They may ask you for more information about the property and debts listed in your application. They will also be able to answer any questions you may have about the bankruptcy.

7

Returning your paperwork

Within 14 days of your bankruptcy, you’re likely to receive some more paperwork from the Official Receiver that you’ll need to sign and return. There is often a short timescale to return these forms, so please call us if you’re not sure how to complete them.

8

All done!

That's it! The process is complete and you've taken another step in your journey to becoming debt free. Remember, bankruptcy doesn't last forever, it's usually just a year. It's not a life sentence, it's a way of clearing your debts so that you can get on with your life.

Will anyone find out about my bankruptcy?

There are just two places where all bankruptcies are listed: 

1. The Individual Insolvency Register
This is an online register of all active insolvencies. The record will be removed from this register shortly after your 12 month moratorium (how long your bankruptcy lasts).

2. The Gazette
This is an online list of public information that is mainly used by people in the finance industry. This information will be listed here indefinitely.

Both of these listings are not normally looked at by members of the public, so it’s unlikely that anyone will find out about about your bankruptcy, unless you choose to tell them yourself. 

It’s very rare for your bankruptcy to be listed in any local or national newspaper. Normally the only people who are formally notified about your bankruptcy are the people you owe money to. The Official Receiver does this shortly after your bankruptcy has been approved.

Withholding your address from the public register

If having your address in the public domain could put either you or a family member at risk, you can apply for a Persons at Risk of Violence Order (PARV) from the court. This order will authorise the Insolvency Service to withhold your address from the public register of bankruptcies. If this is something you require, please contact us. We can help prepare the relevant application forms for you.

What about my job?

There is normally no reason for your employer to be told about your bankruptcy if you’re currently working. However, there are some jobs you are not allowed to do during your bankruptcy, like being a solictor or a director of a limited company. It might affect jobs in banking and financial services too. There are also voluntary jobs you can't do, like being a trustee of a charity or a school governor. If you are unsure if your job is affected, you should speak to your employer. 

How will bankruptcy affect me?

Once your bankruptcy has been approved, you’re officially declared bankrupt and begin a 12 month moratorium period (how long your bankruptcy lasts). During those 12 months, there are some things that you need to be aware of:

Income
If you have an increase in your income, this will need to be declared to the Official Receiver. If you’re receiving income from a wage or a private pension, the Official Receiver may ask you to make a monthly payment towards the bankruptcy. This is called an Income Payments Agreement (IPA) and it lasts for three years.

Personal details
It’s your responsibility to keep the Official Receiver up to date with any changes in your circumstances during this 12 month period. This includes your employment, financial changes and any other personal details.

Assets
If you receive an asset of significant value or a lump sum of money (like lottery winnings, inheritance or a tax rebate) during your bankruptcy, you’ll need to declare this to the Official Receiver. It's likely that they will seek to take this and use it to pay your creditors.

Credit
During your bankruptcy you aren’t allowed to take out additional credit of more than £500 without informing the creditor that you are bankrupt.

What will happen to my bank accounts?

You may find that any bank accounts in your name are ‘frozen’ after your bankruptcy is approved. This can be for up to two weeks, however it is usually only for a few days. This is just temporary and isn’t the same as your account being closed. During this time, you may not be able to take any cash out or make payments on a debit card. Any direct debits or standing orders you’ve set up will be delayed until after this period.

Because of this, it’s a good idea to withdraw any cash that you may need during this time, before you submit your application. It may also be sensible to submit your application just after being paid to ensure you have enough money to take some out beforehand.

Your bank may decide to close your account once you’ve been made bankrupt. If this happens, you should be able to find another bank that can provide you with a basic bank account. It may be sensible to wait until after you’ve submitted your bankruptcy to open a replacement bank account, otherwise you’ll have to list this new account on your bankruptcy application.

Some banks only allow bankrupt customers to have a specific kind of account. This may mean your existing bank may make you change the type of account you have. If you want to be certain about what your bank will do, get in touch with them about your options before you submit your application.

I’m not a CAP client but I’m struggling with debt, can you help me?

At the moment there are no appointments available for our Debt Help service, but help is available through a number of other free, trustworthy organisations. Find out more about them and how to get in touch here.


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