Disadvantages
Although Bankrupts can now be annulled within 12 months if you still have sufficient income, the Official Receiver or Trustee appointed by the court can ask you to enter into an Income Payments Agreement to pay your creditors back some more money for up for up to 3 years. If you do no agree the can enforce an Income Payments Order and have it deducted by your employer.
All your Bank Account and any savings accounts will be frozen immediately. This includes any joint bank accounts even if your spouse has not been petitioned for bankruptcy. It is therefore essential that any spouse creates a separate account before applying for bankruptcy or as soon as you receive a Statutory Demand.
Bankruptcies are publicly advertised both in your local paper and the London Gazette.
You lose control of your hard earned assets. A Trustee in Bankruptcy is appointed whose job will be to sell assets and give money to creditors.
You will almost certainly lose your car (unless it is only worth nominal value) and home. You will however be given at least 12 months to remain in your home whilst you seek alternative accommodation.
A court appointed bailiff will be appointed to come to your home almost immediately to seize personal assets, which is a daunting procedure especially for any family you have. Although you will be allowed to keep household goods and a reasonable amount to live on, this will probably be a lot less than you are used to.
If you run a business the official receiver will normally close it down dismiss your employees and sell any assets.
A note of your bankruptcy will be kept on your credit file for 6 years, which means, even after being discharged (released) from your bankruptcy, you may find it difficult to get credit or a mortgage.
Unlike under IVA’s a bankrupt will no longer allowed to be a company director. Whilst you are technically allowed to be one again after you are discharged, unless you are able to get your own business up and running again, you may find it becomes unlikely.
If self employed you will not be allowed to trade in any business under a different name unless all persons involved are informed of your bankruptcy.
You will not be allowed to practice as a Lawyer or Chartered Accountant or Financial Adviser.
