The effects of bankruptcy
Once made bankrupt all assets belonging to that individual come under the control of the Official Receiver or Trustee, including the individual’s home.
If the bankrupt lives with a partner and/or children then a period of twelve months may be allowed for other living arrangements to be made. At the end of the twelve-month period, the property will almost certainly have to be put up for sale, enforced by a Court Order if necessary. If the property is co-owned with someone else they may be able to make an offer to buy out the bankrupt’s interest in the property from the Trustee.
In addition the Trustee may sell other assets belonging to the bankrupt to help repay the debts.
The Trustee may also require the individual to contribute a proportion of their surplus income for a period of 3 years from the date of the bankruptcy order through what is known as an Income Payments Order or Income Payments Agreement.
Other effects of bankruptcy on the individual include:
- The possibility of losing their job as in some professions bankruptcy is not tolerated. Included in these are the Police Force, the Armed Forces and any occupation that involves the handling of money;
- The stigma of being bankrupt - the order is publicly advertised in the individual’s local area;
- The restrictions placed upon all bankrupts until they are discharged from bankruptcy; and
- The impact on the individual’s credit rating, affecting the ability to obtain financial services and other services where such a file is checked.
