If you want to get a bankruptcy order you have to follow a prescribed procedure. Once your bankruptcy order is in place, the money that becomes available from your bankrupt estate will be distributed amongst your creditors but only after the costs of the trustee in bankruptcy have been paid. If you want to have yourself declared bankrupt, you'll use the online application procedure discussed below.
Who can apply online?
If you are unable to pay your debts and want to have yourself declared bankrupt you will have to applyfor an adjudicator to grant a bankruptcy order.
Will the adjudicator have jurisdiction to consider your application?
The EC Regulation on insolvency aims to improve the efficiency of insolvency proceedings, such as bankruptcy proceedings, where there is a cross-border element. The result is that prominence will be given to insolvency proceedings started in the EU member state where you (as the debtor) have your centre of main interest (COMI). These will be the main proceedings and will have effect with regard to all your assets and creditors wherever situated (except for some restrictions applicable to territories where non-main proceedings have already been started). If there are insolvency proceedings against you at the same time in other EU states where you do not have your COMI those proceedings will only have local effect.
You can only apply online for a bankruptcy order if:
What must be included in the application?
The bankruptcy application made online must include all the necessary details of your debts, liabilities, creditors and personal information. You must also confirm in the application that:
You have to authenticate the application by either giving confirmation of your identity in a way required by the adjudicator or otherwise by including a statement of the sender's identity and the adjudicator has no reason to doubt the truth of the statement. If the application is made in hard copy, then your signature will be proper authentication.
The prescribed information
Some of the comprehensive information that has to be included in the application is:
The application fee and deposit
A deposit of £550 to cover part of the costs of the Official Receiver for administering your bankrupt estate and an adjudicator's administration fee of £130 must be paid. The payment can be made online either in a single payment or by instalments. The application will not be regarded as having been made unless these amounts have been paid in full.
The bankruptcy application must be made, unless you have made specific arrangements with the adjudicator. The date of the application will be the date that the application is submitted to the adjudicator and it will be regarded as having been 'made' when the adjudicator acknowledges receipt of the application either electronically or in another way. However, an application will not be regarded as having been made unless the deposit and fees (see above) with regard thereto have been paid in full.
A bankruptcy application may not be withdrawn, but you must inform the adjudicator if after submitting the bankruptcy application you become able to pay your debts or a bankruptcy petition is presented to court by a creditor (someone you owe money to) for your bankruptcy.
How does the adjudicator decide the application?
An adjudicator has no discretion whether or not to grant a bankruptcy order. If the prescribed conditions are met, he is obliged to grant it and if it isn't he has to reject it. These requirements are that:
The adjudicator has to make his decision within 28 days from the date that the bankruptcy application is made. If the adjudicator asks for more information from you after 14 days from when the application was made, the 28 days will be extended by 14 days. If the adjudicator fails to make his decision within this period it will be regarded as a refusal to make the bankruptcy order.
What happens if the application is refused?
If the adjudicator refuses to make the bankruptcy order he will give you reasons for that decision. You may request the adjudicator, within 14 days from delivery of the notice of refusal, to review the decision. The adjudicator can't consider any new information during such review process. If the adjudicator confirms the refusal you may appeal to court within 28 days from the date that the confirmation of the refusal was delivered to you.
What happens if the bankruptcy order is granted?
If the adjudicator makes the bankruptcy order you will be given a hard copy thereof. You can also access the order via the online system. Once the order is made it will be passed to the Official Receiver (OR) who will contact you to advise the next steps.
When the court makes a bankruptcy order, it will pass its files to the Official Receiver (OR), who is a person who works for the. You have to give the OR a statement of affairs within 21 days of the bankruptcy order. The OR must, within 12 weeks of the bankruptcy order, decide whether to appoint themselves as trustee in bankruptcy (TIB) or instead call a meeting of creditors to enable them to appoint an insolvency practitioner of their choice as the TIB.
Ownership of all the assets in your 'bankrupt's estate' passes to (vests in) the TIB automatically on their appointment.
The main duty of the TIB is to convert the value of the assets in your estate to money. From these proceeds the TIB will first pay their own costs and expenses and then the balance available will be used to pay off as much of the 'bankruptcy debts' as possible. The TIB has wide powers to enable them to perform their duties.
Assets of your bankrupt estate
All assets, including your sole or principal residence, property acquired after the bankruptcy order and choses in action, in which you have an interest form part of your bankrupt estate except the following:
Your main home
Special rules apply to your beneficial interest in your home or main home or in the home or main home of your present or former spouse or civil partner. This interest will automatically re-vest in you 3 years after the bankruptcy order unless by then the TIB has:
Unless the court orders otherwise, the beneficial interest will also re-vest automatically in you if the TIB makes an unsuccessful application in respect of the home.
If the Official Receiver is the TIB they will deal with your home as follows:
If there is sufficient equity and if the OR is not aware of any willing purchaser the OR can apply for a Secretary of State appointment of an insolvency practitioner as trustee of your bankrupt estate to deal further with the property.
If the value of the interest is more than a £1,000 but is insufficient to attract the appointment of an insolvency practitioner, the OR would invite offers from you or another connected person (for example your spouse) to buy the interest. If no offer is received that would allow transfer of the interest before expiry of the 3-year period, the OR could apply for a charging order against the property.
If the value of the interest is less than £1,000 the OR will take steps to re-vest the beneficial interest in you.
However, any assets you acquire after discharge of the bankruptcy order, do not vest in the TIB, but belong to you.
To be recognised as a bankruptcy debt the claim must be payable in money (or money's worth) and arise from an obligation incurred by you prior to the date of your bankruptcy order. This means that the debt can either be due at the date of your bankruptcy order or it can fall due only after the bankruptcy order as long as the obligation which resulted in the debt occurred before the date of your bankruptcy order. If this is not the case the claim will not be counted as a bankruptcy debt.
You will be under an 'obligation' if, at the date of the bankruptcy order, there was a genuine possibility of a payment liability arising out of some form of legal relationship or duty.
The debt can be contractual, a tortious liability, a liability created by statute, etc. It doesn't matter whether the debt is certain or contingent and whether the amount is fixed or only capable of being determined by rules or opinion.
Any interest due on a bankruptcy debt with regard to the period prior to your bankruptcy order can be proved as part of the bankruptcy debt.
An exception to the above is that child support maintenance can't be a bankruptcy debt.
Proof of debt
To prove for his debt in bankruptcy your creditor will complete a Proof of Debt Form (Form 6.37). In this form the creditor will state how and when the debt was incurred, the total amount of the claim and the amount of any un-capitalised interest. The creditor can also attach to the form any documents in support of the claim.
After proofs of debt have been lodged with the TIB they will be available to be inspected by:
If the TIB agrees thereto, a creditor that submitted a proof may at any time thereafter withdraw it or change the amount claimed. If the OR received any proofs before the TIB was appointed, he is to send them with an itemised list to the TIB. The same will happen should a new TIB be appointed.
The TIB can admit a proof either for the whole or part of the amount claimed. If he rejects all or part of the amount claimed, he has to provide the creditor that submitted the proof with written reasons for doing so. If this creditor is not satisfied with the reasons he may, within 21 days from the date of receiving the reasons, appeal to the court to have the decision reversed or varied. You and any other creditor may also appeal the decision of the TIB on any proof and may do so to the court within 21 days of becoming aware of the TIB's decision. If the TIB is of the opinion that a proof has been improperly admitted, he can apply to court to have it expunged or the amount reduced.
Powers of the TIB
The trustee in bankruptcy (TIB) has wide powers with regard to your bankrupt estate once it has automatically vested on their appointment.
Some of your responsibilities as a bankrupt include the following:
Some of your restrictions include the following:
Bankruptcy restrictions order and bankruptcy restrictions undertaking
If the OR is of the opinion that you've been dishonest or is to blame for your bankruptcy debts the court can make a bankruptcy restrictions order (BRO) against you. This application would be made by the Secretary of State or the Official Receiver acting at the direction of the Secretary of State. The Secretary of State or Official Receiver may apply for a BRO at any time within a year of your bankruptcy order, but require the court's permission to make an application after that time.
The BRO effectively extends the period for which you will be subject to the above obligations and restrictions and can add further restrictions.
Some of your actions that could result in a BRO application are:
The BRO can continue for up to 15 years but not less than 2 years, as determined by the court. The BRO is not affected by your discharge from bankruptcy. You could agree to a bankruptcy restrictions undertaking (BRU), which has the same effect as a BRO, but avoids the need for a court application.