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Is Bankruptcy right for me?

All too often people who would benefit greatly from the protection of Bankruptcy dismiss the idea out of hand due to nothing more than misplaced fear caused by a simple lack of knowledge of the facts.

Suitable circumstances for those who might benefit from entering into the protection of a Bankruptcy Order:

  • People with no assets (including those with no equity in their property)

  • People living in either rented accommodation or with friends and family

  • Those whose employment would not be lost or adversely affected by a Bankruptcy Order

  • People who agree with the moral aspect of bankruptcy

It is a general misconception that bankruptcy is punitive and that bailiffs will seize your goods and belongings leaving you nothing but a change of clothes. This is false.

If you have no assets (property, expensive car, stocks and shares etc) then your home is pretty much safe. In a bankruptcy you may still be able to own a car, have electrical items such as a computer and most defiantly have a bank account.
 
If you own a property you may still be able to keep the property when you go through bankruptcy!
If you have more than £15,000 worth of debt - Bankruptcy may be the option for you!

Often bankruptcy is the fastest and cheapest way out of debt. Bankruptcy should be considered if you have no assets to protect, live in rented accommodation or a mortgaged property in negative equity, and are in employment that will not be affected by Bankruptcy. Please contact one of our consultants if you are in the Armed Forces or work in the Police Force or Emergency Services and we will go through your options.

In these modern times our experience is that it is very doubtful whether bankruptcy still carries the stigma it once did and since April 2009 bankruptcies are no longer advertised in the press unless they it is in "the public interest". In recent times even our major banking institutions have been "bankrupt"! It is interesting that 362 people today will be declared insolvent or bankrupt in England and Wales. KPMG estimate this will increase to 411 people a day throughout 2009 or 1 person becoming bankrupt or entering into an Individual Voluntary Arrangement (IVA) every 3.5 minutes. [Credit Action] Debt Statistics (September 2009). If you choose bankruptcy, you are not alone!

Bankruptcy Is Becoming Easier!

The law changed in 2004 and the mandatory period required to serve under the Bankruptcy Order was reduced from 3 years to 1 year even if you have been Bankrupt before.

However, Bankruptcy is no longer a punitive action and is there to allow discharged Bankrupts the opportunity of rebuilding their lives. In many cases, Bankrupts can be discharged from Bankruptcy in as little as 3 months, at the Official Receiver’s discretion. An early discharge is possible provided no creditors object. For those granted an early discharge, the average discharge period is around 7 months.

Also the official receivers are fazing out publicising bankrupts, the new rule being that you will only be put in the local paper if you are of public interest or committed fraud. Ordinary people no longer have their bankruptcies publicised..

Personal bankruptcy

Don’t Go Through It Alone - Let Moneymeans Guide and protect you!

Millions of people are facing Bankruptcy or Insolvency worldwide. In the UK, someone enters into insolvency (iva) or Bankruptcy every 3.5 minutes.  It is a difficult and stressful situation for those who are experiencing seemingly unresolvable debt problems.

Individuals find it difficult to locate accurate information at a time when they really need it. This information may then enable the individual to halt debt proceedings and achieve a more favourable negotiating position.

Remember that Moneymeans is detached from your situation and we review your position objectively. We intend to provide you with the insight to steer your way out of the financial position you currently find yourself in. We are geared ut to provide you with the motivation and will to recognise that change needs to take place if you are to achieve financial security. We endeavour to take Bankruptcy proceedings and negative trading positions through to positive solutions.

Negative Situations Can Be Turned Into Positive Solutions!

We aim to handle every case promptly. When necessary, we can send a representative to your home to assist you with paperwork. In urgent cases, we can send field representatives to assist you with the paperwork. If the need for a solution is really urgent, we can even adopt a 'drop everything' posture and shuttle your case to the front of the queue. We can have your case in the Courts within days, if needs be.

We can get you a date and time for a court appointment to go through bankruptcy on the first call!

How Long Will Bankruptcy Last?

The statutory period for a Bankruptcy is 12 months (maximum). However, at the Official Receiver’s discretion, you may be released after a few months. This might typically happen when it is unlikely that an individual’s circumstances will change. The Official Receiver’s job is to secure payments for the Creditors, but in cases where there is no prospect of this, he would rather close your case file and move on.

What effect will Bankruptcy have on me?

You are immediately free from debt and will not be responsible for any of your pre-existing debts. It is a fresh start for you and your family enabling you to start again and to re-build yourself up to a position of strength. You are immediately protected from all of those Creditors who formed part of your bankruptcy. The restrictions that you are placed under for the duration of your Bankruptcy Order are simply that you are unable to act as a Company Director until your discharge and if you borrow a sum of money greater than £500, you are obliged to disclose your Bankruptcy status to the lender. You should understand that it is extremely unlikely that you will be able to borrow money from a High Street lender.

Income Payment Agreements (IPAs) and Income Payment Orders (IPOs)

After a bankruptcy order is made you no longer need to pay (most of) your creditors and if you receive a monthly income this may result in a surplus after your normal reasonable living and other expenses have been paid. Only if there is a monthly surplus of income over a certain figure will the Official Receiver try to negotiate with you for a voluntary arrangement (Income Payment Agreement) that each month a percentage of this surplus be paid to your trustee in bankruptcy. The trustee will then split this between your creditors. If there is a monthly surplus and you fail to agree a reasonable monthly payment then the Official Receiver can elect to apply to court for a Judge to review your circumstances with a view to imposing on you a mandatory Income Payment Order. Whether it is an IPA or an IPO the usual duration is for a maximum of 3 years.

If during the period when either an IPA or IPO is in force your circumstances change (and the monthly surplus is affected) the monthly payment will be varied.

The Official Receiver will not get either an IPA or an IPO if, by making such payment, this would not leave you with enough money to cover the reasonable domestic needs of you and your family. There is no fixed amount that any particular individual or family can claim since it all depends on the particular circumstances of the case. As part of the work that Moneymeans will do for you, we will help you prepare a detailed Income & Expenditure schedule maximising your legitimate entitlements for reasonable monthly deductions and thereby minimising the possibility that an IPA or IPO will be made, or if made that it will be no greater than it need be. For example, it is a little known fact that in such an Income & Expenditure schedule you can legitimately and correctly claim a sum each month towards an annual holiday! One of the reasons, therefore, for asking Moneymeans to help you with your bankruptcy is to take advantage of our extensive expertise in this field thereby reducing the risk of an IPA or IPO being made.

Two important points:-

1. A monthly surplus of under £90 will not result in any IPA or IPO being made. A monthly surplus of over £100 will only result is a 50% award. Even if you have a monthly surplus of over £100 you will still be entitled to keep the remaining percentage surplus. Not all of any surplus is taken. And, if you have a monthly surplus, it may be a small price for you to pay part of this to your creditors in return for having written off your debts.

2. If you were previously in an Individual Voluntary Arrangement (an IVA) (paying creditors an agreed monthly sum) then it would usually be the case that any IPA or IPO would be less each month than your previous payments under an IVA; you are still better off financially in bankruptcy paying a monthly IPA (or IPO) than you were in your IVA. Bankruptcy is the cheaper option.

At Moneymeans, not only do we work hard to ensure that you claim all of your legitimate monthly items of expenditure (thereby reducing the possibility of any IPA or IPO being made in the first place) but in the event that your Official Receiver challenges the figures and tries to impose an IPA we have had considerable success in contesting these. We set out below a success story:-

We recently prepared an Income & Expenditure schedule for two of our clients only for the Official Receiver to try to impose a monthly IPA of £131 based on an alleged monthly surplus that they had recalculated. We challenged their figures, asking them to confirm in writing exactly what they were arguing was unreasonable about our calculations and for them to justify their approach generally. We explained a little more about our clients' circumstances and stressed that the figures we had put forward were both reasonable and appropriate. After some correspondence we received the following.

Subject: ***********
Date: Tue, 6 Oct 2009 14:22:55 +0100
From: *************
To: **************
Dear Mr and Mrs *******,

Thank you for your correspondence dated 17 September 2009.

On review of your joint expenditure following the additional information you have provided, I am writing to confirm that currently there does not appear to be a significantly high enough surplus to apply an Income Payment Agreement at this point.

Please note that the Nil Tax Code monthly payment will still be applied and the relevant paperwork has been issued for you to sign and return.

Please note that it is a requirement of your bankruptcy to inform the Official Receiver of any changes in your income and expenditure during your bankruptcy period.

I trust that this is in order but if you do have any further queries please contact me ********.

Regards

******* ******  
Examiner

The nil tax code just means that the Official Receiver will only reclaim such sum as the client would otherwise have paid in tax to the government for the rest of the current financial year, which is entirely standard in any bankruptcy.

No IPA or IPO was made or imposed.