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Income payments orders & agreements
If your surplus income is more than £20 per month, the official receiver will normally expect you to pay it all into your bankruptcy. The surplus is spare income after you have paid your ordinary household expenses.
Debts still payable after bankruptcy
Liability for most debts will be written off once you are discharged. However you will still remain personally liable for any; magistrates’ court fines, student loans, arrears of maintenance or maintenance payments ordered by a court, Child Support Agency and Child Maintenance Service arrears, debts you built up through fraud, and debts you owe as a result of a personal injury claim made against you.
Items such as clothing, bedding, furniture and household equipment essential for basic domestic needs are not treated as assets. In addition, items necessary for you to carry on your employment or vocation such as tools, books or vehicles may be excluded. If you have assets that are not exempt from bankruptcy, usually a trustee will be appointed to sell them. Your car might be sold if it is valuable, but it may be exempt if it is necessary for your employment or basic domestic needs of your family, you may still have to buy a cheaper replacement though depending upon its value.
The family home
If you own property, and there is equity it may be sold. The equity in a property is the amount left after deducting what is owed on any mortgages and secured loans from the value of the property. The term ‘beneficial interest’ is described as your share of the equity, for example your beneficial interest will usually be all of the equity if you are the sole owner. Your beneficial interest in your home is transferred to the official receiver or trustee.
If you have a personal or workplace pension, you are likely to be able to keep it. The exception would be where you have paid very large amounts into your pension in order to prevent creditors from taking your savings. For personal or workplace pension funds that you have claimed, the official receiver will assess how much income you earn from it and this may influence the decision made when deciding on an income payments agreement.
Hire Purchase agreements
If you have a hire purchase agreement, there may be a clause in it that allows the hire-purchase company to terminate the agreement and return the item or vehicle, if you become bankrupt. Depending upon the value of the vehicle and how much is left to pay under the agreement, the official receiver may sell the vehicle. There may be some situations where you are allowed to keep the vehicle (for example a third party takes over the payments for you).
The following banks must now allow an undischarged bankrupt to open a basic bank account:
Credit Reference Agencies
Your bankruptcy order will be registered with credit reference agencies for six years. After the six years you may be asked whether you have ever been bankrupt, when applying for some credit, for example a mortgage.
If a creditor applies to make you bankrupt, you will initially receive a statutory demand. A creditor can apply for a bankruptcy order 21 days after this has been served. Please refer to our statutory demands information page.