If your debts are in your name then your partner is not liable for any payments. Their assets cannot be taken into account to repay your creditors and a bailiff cannot take items belonging to your non-bankrupt partner.

Bankruptcy will not directly affect your partner – but there can be other indirect implications.

How does bankruptcy indirectly affect my spouse/partner?

Whether a bankrupt person will be required to make Payments From Income and at what level needs to be determined. The Official Receiver may request information about your partner’s income and the household outgoings as this impacts your ability to make such payments.

What if we have joint debts in Bankruptcy?

Bankruptcy will affect your spouse/partner if you have joint debts. You are not liable for someone else debts just because you are married to them.

A common misconception is that if you have joint debts, each party is only liable for half of the debt. This is not the case. If you have joint debts and you are made bankrupt then your non-bankrupt spouse/partner will be liable for the total debt. For more information see Bankruptcy With Joint Debts.

What if we own our home in joint names?

If you jointly own your home, you both have what is called a beneficial interest This forms part of your estate and the property may have to be sold to go towards paying what you owe.

Beneficial Interest means – your share of the money if an asset, such as a property, is sold.

When you are made bankrupt, your beneficial interest always transfers to the Official Receiver or Trustee. However, your spouse/partner can buy your interest in the home from the controlling Trustee. This helps the Trustee realise the value of your interest in your home and they can pay this money to your creditors.

Realise in this context means – to sell to raise money.

While the share owned by your spouse or partner can’t be used to pay towards your debts in the bankruptcy, its sale can be forced to get hold of your share.

Don’t assume that because your house is jointly owned that it won’t be sold to repay your debts. If your partner and/or dependent children live at the property it is possible for the sale of your home in the bankruptcy to be delayed for twelve months in order that alternative housing arrangements can be made.

What if our home is only one of our names?

Then it can become complex as it depends, in the absence of anything in writing, upon implied beneficial interest.

Remember, only the beneficial interest of the bankrupt person can be forced to be paid into the bankruptcy. It is therefore advantageous that the bankrupt person does not have a beneficial interest and that the non-bankrupt person has such an interest.

There is a stronger case for beneficial interest if you are married and there are children involved and the property is a family home to which you’ve been making a financial contribution.

The case is less strong if your not married and have only been together a short time and you have not made deposit nor mortgage contributions.

In cases of dispute; a forensic examination of the finances of all parties involved may be required. Putting the property in the name of one party and claiming a 100% beneficial interest yet the other party has been making mortgage repayments will not fool the Official Receiver/Trustee.

Please contact for advice if any of this is of concern to you.

There is often confusion when to comes to joint debts. Which debt really are joint and what happened when one party can’t pay?

Joint Debts Explained

Joint debts are when two or more parties (people) have signed a credit or loan agreement together, or some other form of agreement for goods or services to be provided for the benefit of all parties. In most cases, all parties are individually responsible for the full amount of the debt.

This is called joint and several liability. It is not true that, in such circumstances, each is liable for half the debt. If one person can’t (or won’t) pay, creditors can and will pursue the other for the full outstanding amount.

It does not matter the purpose of the loan, who spent the money, or who benefited from it. It does not matter who is, or has been making repayments to date. If the debt is a joint one, it does not matter if the cause of the debt is the other person’s financial irresponsibility. In the eyes of the law you are both responsible for the settlement of the entire debt.

Your Partner’s Debts

You are not liable for anyone else’s debts unless you co-sign a credit agreement or are acting as guarantor.

This is true even when you are married, have a civil partnership, or live with them with shared financial responsibilities such as children or joint mortgage. Conversely, someone else’s debts can’t be included in your bankruptcy.

Joint Debts on Credit Cards

Often there is confusion about who is liable for credit card debts. Credit cards are never issued in joint names.

The credit agreement is with a primary cardholder, who may have requested an additional card for their spouse/partner. Any additional cardholder is simply given the facility to use the the primary card holder’s credit. All debts are in the primary cardholder’s name. It does not matter which card is used.

Bank Accounts

Bank accounts that have been opened under two joint names are also liable to be caught up in the insolvency, and must be submitted to the Official Receiver, who will calculate an amount to deduct on your behalf. It’s likely all access to these funds will be frozen whilst this is assessed, meaning the account will be unavailable to everybody else too.

Impact on the other party

Should you become bankrupt – the the full liability of the debts will fall upon the other party. This may leave them with large financial headache and in impossible situation.

[bitsontherun NySPsYw0]

035S – BAS

Director applying for personal bankruptcy, how does it affect me?

When applying for personal bankruptcy as a Director there are some specific things to be aware of.

Once application to the court is granted, the bankrupt – you – is immediately placed under a number of “Bankruptcy Restrictions” (usually lifted when discharged from bankruptcy).

These set out the basic terms of your bankruptcy, under which the following is a criminal offence:

Being concerned (directly or indirectly) in promoting, forming or managing a limited company, or acting as a company director, without the court’s permission, whether formally appointed as a director or not.

Clearly, then, there is no way that you could continue as a Director if the court were to agree to grant your personal bankruptcy order.

You would, though, be allowed to continue as self-employed, or trade in a partnership, subject to restrictions. You’d be responsible for: keeping accounting records and dealing with the tax and VAT requirements.

If your business were to be carried on in a different name to that which you were made bankrupt by the courts, it’s your responsibility to inform everyone you do business with the name in which you were originally made bankrupt.

Once discharged from bankruptcy (normally after 12 months) all Restrictions are lifted. With specific relevance to a Director is the fact that you may again act as a director of a limited company and/or be involved in its management.

However, this would not be the case if subjected to a “Bankruptcy Restrictions Order” (BRO):

During the course of any bankruptcy, if the Official Receiver (a court official who oversees your case and deals with your debts) can reimpose the original Bankruptcy Restrictions, for a set period of between two and 15 years, if they believe the bankrupt to have been uncooperative or dishonest at any stage. Similarly, breaking any of the original Restrictions – a criminal offence – would bring the same action.

The main statutory consequences of a BRO for a Director is clearly set out in the Company Directors Disqualification Act 1986, s. 11(1):

It is an offence for a person to act as a director of a company or directly or indirectly to take part in or be concerned in the promotion, formation or management of a company, without leave of the court at a time when … (b) a bankruptcy restrictions order… is in force in respect of him.

Additionally, the office of Director is automatically vacated if the Director in question is subject to a BRO.

Furthermore, if found to be taking part in a company’s management without the court’s permission, you’d be personally responsible for any company debts that come about during your time as a manager.

Of course, all this applies only if first issued a BRO. It’s therefore very prudent to behave honestly and cooperate fully at all times when bankrupt.

Bankruptcy is neither an easy solution nor a quick fix and will have far-reaching consequences. For example, according to the government, “less than 5% of bankrupts had started trading, obtained credit, traded under a name other than the one used in bankruptcy or become a company director,” since being discharged.

However, one of the major benefits to being successfully discharged from a well-conducted bankruptcy is emotional. Furthermore, the Insolvency Register keeps no details of disqualified directors (should you fall foul of a BRO).

[bitsontherun nLNzwldD]

Do you lose your bank card when you go bankrupt?

Bankruptcy affects you in many different ways. It makes it very difficult for you to get credit. It can affect your ability to be a director of a company. And, it can mean you losing your home or other assets.

But, how does going bankrupt affect your bank account? Can you keep your bank card or will your bank cancel it and take it off you? We answer your questions here.

• What happens to my bank account in bankruptcy?

When your bank finds out about your bankruptcy order they will freeze your account. You should also immediately stop using your cheque book and bank cards and hand them over to the official receiver. However, this may not be the last you see of your bank cards, as we explain later.

As your account will be frozen, you will also need to make alternative arrangements for receiving money into your account (for example, wages) and for paying direct debits and standing orders.

If you try and open another account before your bankruptcy is made, this will also be frozen.

• What happens next?

After the bankruptcy order has been made and your bank account has been frozen, the official receiver will find out from the bank what is in your account.

If you have money in your account at the date of your bankruptcy, this will be claimed by the official receiver or the trustee in bankruptcy as an asset. It will be used to repay some of your debts to some of your creditors.

However, if the official receiver decides that you need some of the money in your bank account for necessary living expenses they will tell the bank to release it to you. The official receiver will tell your bank how much to release to you and ask for the balance to be sent to them to distribute to your creditors.

In every case, it is your bank that will then decide whether or not it will let you carry on using the account. The official receiver is not involved in the decision. Your bank will also decide whether it returns your bank card to you and lets you continue to use it.

If your bank account only contains the money that you need for your day to day living expenses, it is likely that you will be able to keep your bank card.

• Can I open a new bank account?

After your bankruptcy order has been made, you may open a new bank or building society account if you wish. If your existing bank won’t let you continue to operate your account or use a bank card, you may have no choice but to do this.

However, you should tell the new institution that you are bankrupt. It is for the bank or building society to decide whether they will let you operate an account.

As a bankrupt you might find it difficult to open a new bank or building society account. The BBC reported in September 2012 that here is now only one bank that will offer a bank account to you in the 12 months after a bankruptcy order has been made.

Undischarged bankrupts can typically only open a ‘basic bank account’. These accounts have no overdraft or monthly fee and a limited number will come with a very basic bank card.

• What to do next?

If you have debt problems and you are worried about what will happen to your bank card and bank account, you should speak to a professional. By taking advice on your options you may be able to tackle your debts while keeping your debit card and your bank account.

[bitsontherun yZzxV1K5]

How long after bankruptcy can I get credit?

One of the main consequences of going bankrupt is that is has a significant knock-on effect on your credit rating. A bankruptcy order stays on your credit file for several years, impacting your ability to get everything from a mortgage to a mobile phone contract.

Our guide looks at how long your bankruptcy affects your credit rating and how quickly you can get credit after being made bankrupt.

• What are the restrictions on getting credit during my bankruptcy?

During the period of your bankruptcy, you are subject to a number of restrictions. One such restriction is that you are legally bound to tell a lender that you are bankrupt if you are applying for credit of more than £500.

This means that until your bankruptcy is discharged, you are unlikely to be able to obtain any credit at all. This is typically 12 months from the date of your bankruptcy order.

• How does my bankruptcy affect my credit rating?

Your bankruptcy remains on your credit reference file for six years from the date of the bankruptcy order. Even if you have been discharged and have told the credit reference agencies, the record of your bankruptcy will still stay on your file for six years.

When you have been discharged from bankruptcy you can ask your creditors to mark any debts included in your bankruptcy as ‘satisfied’ or ‘settled’. You should write to all the creditors who were included in your bankruptcy and give them proof of your discharge from bankruptcy. They can then change the information on your credit reference file.

After six years, the credit reference agencies will automatically remove the bankruptcy entry from your credit reference file.

If you apply for any credit within six years of the date of your bankruptcy order, a potential lender will be able to see that you have been bankrupt. While this may not automatically mean you will be declined for credit, it is likely to make getting credit more difficult.

• How long after bankruptcy can I get credit?

Once your bankruptcy restrictions have been lifted – normally once your bankruptcy is discharged – you can apply for credit straight away.

However, you are likely to find that organisations might refuse to give you credit or other financial services simply because you have been bankrupt in the past. This is especially true if your bankruptcy happened quite recently.

If you do manage to find an institution who will lend to you, it is possible that they will charge you a higher interest rate. This is because they will see you as a high-risk customer because of your previous bankruptcy.

The truth is that getting credit is likely to be difficult while the bankruptcy order remains on your credit file. However, showing that you can responsibly manage credit – perhaps with a high interest credit card – is likely, in time, to improve your chances of getting credit.

While your bankruptcy will disappear from your credit file after six years, some mortgage lenders will ask if you have ever been bankrupt. This means that your bankruptcy could affect your creditworthiness forever.

• What to do next?

If you are experiencing debt problems then you may be considering bankruptcy. However, going bankrupt could have a significant impact on your ability to obtain credit in the future. Consequently, it is wise to speak to a debt professional before making any decisions. There may be other options open to you which won’t have the same impact on your creditworthiness.

[bitsontherun E84tks5s]

How long after bankruptcy can you buy a home?

This is a tricky question to answer but, unquestionably, buying a home is a costly affair and many people need to borrow in order to afford it. Bankruptcy itself, though, has a big affect on your ability to borrow and secure credit.

Once declared bankrupt all bank accounts/building society accounts are frozen and all moneys therein – plus all bankcards, credit cards and chequebooks – passes into the control of the Official Receiver (the court official who deals with your debts on your behalf).

Any extra income floating around would also be tied-up in regular payments into the Bankruptcy Estate over a specific period of time (in the form of IPAs or IPOs).

Consequently, once declared bankrupt it’s unlikely you’ll have the means to buy a home without help, making borrowing/credit even more important.

However, a term of the ensuing Bankruptcy Restrictions placed upon you makes it plain that, until discharged, a bankrupt may not obtain credit of £500 or more – either alone or jointly with any another person, without first disclosing the bankruptcy (failure to do so is a criminal offence).

After the bankruptcy order, it’s possible to open new bank and/or building society accounts. It’s down to the discretion of the bank/building society whether to let you do so or not and many will refuse. Even if they agree, it’s likely they will impose conditions and limitations.

So, the outlook for borrowing to buying a home in the period immediately after a bankruptcy order is made (i.e. during bankruptcy) is highly unfavourable.

This scenario would last until you were “Discharged” (released) from bankruptcy – normally 12 months, on the anniversary of the court granting the bankruptcy order.

Of course, if the Official Receiver deemed you to have acted dishonestly at any point, subjecting you to a Bankruptcy Restrictions Order (BRO) as a result, then all the original Restrictions will be reinforced for a set period of between two and 15 years.

Even once discharged, the fact that you’ve been bankrupt will severely affect your ability to borrow money – creditors will be more unwilling to lend to someone with a track record of struggling to pay money back.

Creditors determine whether you’re a high-risk by looking over your Credit Reference File – a record of your credit history. Among other things this file includes information gathered from public records and these include previous bankruptcies.

The File helps inform credit agencies what Credit Rating you have. If your Rating is low, then they may refuse to lend you money/credit and it’s vitally important to note that bankruptcy severely lowers credit scores.

All information kept on Credit Reference Files, including bankruptcy, stands for a period of six years. However, if you are refused by one Credit Agency it does not mean you will not be successful with another, as for how long it may take for one to agree to lend you money is hard to say.

But lenders don’t expect people to have perfect credit ratings and there’re ways to improve a poor credit history, including paying bills/repayments in full and on time. Any missed or late payments will stay on your File for a period of at least three years after which it will become much easier to secure the means with which to buy a home.

Joint bankruptcy is only available to business partners. If you’re a couple, and both want to go bankrupt, you must petition for bankruptcy individually.

This means that you must submit two sets of forms and pay two lots of bankruptcy fees.

Joint Debts Explained

Joint debts are when two or more parties (people) have signed a credit or loan agreement together, or some other form of agreement for goods or services to be provided for the benefit of all parties. In most cases, all parties are individually responsible for the full amount of the debt.

This is called joint and several liability. It is not true that, in such circumstances, each is liable for half the debt. If one person can’t (or won’t) pay, creditors can and will pursue the other for the full outstanding amount.

It does not matter the purpose of the loan, who spent the money, or who benefited from it. It does not matter who is, or has been making repayments to date. If the debt is a joint one, it does not matter if the cause of the debt is the other person’s financial irresponsibility. In the eyes of the law you are both responsible for the settlement of the entire debt.

Joint Debts and Credit Cards

Often there is confusion about who is liable for credit card debts. Credit cards are never issued in joint names.

The credit agreement is with a primary cardholder, who may have requested an additional card for their spouse/partner. Any additional cardholder is simply given the facility to use the the primary card holder’s credit. All debts are in the primary cardholder’s name. It does not matter which card is used of whether explicit permission for given for a particular purchase or not.

Am I liable for my partners debts

You are not liable for anyone else’s debts unless you co-sign a credit agreement or are a guarantor.

This is true even when you are married, have a civil partnership, or live with them with shared financial responsibilities such as children or joint mortgage. Conversely, you are not be made liable for someone else’s debts.

Joint Liability Debts & Bankruptcy

In the case of joint debts, where one party enters bankruptcy, creditors can pursue the other party for the full outstanding balance of any joint debts. For joint debts to be included in the Bankruptcy

How is a Joint Property treated in Bankruptcy?

If you declare yourself bankrupt and you are a home owner the Trustees in Bankruptcy is required to consider the equity in your property. If your property is jointly owned only your share of any equity can be considered. The other owner’s share cannot be taken into account.

Without a formal written agreement in place, the assumption will be the property is shared 50:50 (or equally between all parties), when the reality might be different. Protecting the rightful share might involve a lengthy and expensive legal argument.

[bitsontherun Rt5gT1sG]

How long will it take to repair my credit score?

It may sound pedantic but you cannot actually take action to alter your Credit Score/Rating, instead you can take action in order to change your Credit History – in turn, this affects you Credit Reference File, which in turn informs Credit Agencies who calculate your Credit Score/Rating.

So how long does it take to change your Credit History? Well, in short time is the best healer for any poor Credit Score – simply ensure all bills/repayments are made in full and on time, every time, and this action will help to restore a bad Credit History.

Indeed, many reputable Credit Agencies – such as Experian – state that regularly paying bills on time is the best way to improve Credit Scores. In addition, it is advised that you should aim to do the following:

“Minimize outstanding debt”

“Avoid overextending yourself”

“Refrain from applying for credit needlessly”

Being subject to any debt collection order/process is a sure-fire way to adversely affect a Credit History or Score.

But it’s true that any negative public records in your History – such as bankruptcy (a matter of public record) – have a shelf life and remain on file for certain amounts of time.

For instance, bankruptcies tend to stay on this record for up to seven years – though this can be longer if the bankruptcy gets complicated by things such as Bankruptcy Restriction Orders. Additionally, information relating to any late payments of bills also remain for seven years.

in addition to ensuring that any/all bills are always paid on time (certainly following a period of bankruptcy and, ideally, before – thus, hopefully, avoiding any need to embark upon bankruptcy) you can also do the following in order to help smooth a path towards a better Credit History:

If you have a credit card(s) then keep any/all balances as low as possible. The same goes for any other revolving credit that you may have (i.e. credit that has no fixed instalment repayment plan). This is because any outstanding debts of a large nature would aversely affect anyone’s Credit History/Score.

You should also be wary of opening new credit accounts willy-nilly, only doing so when absolutely needed. Having a big mix of credit may well prove confusing in the long run when it comes to keeping on top of them all and is not a cast-iron way of improving a Credit History.

Similarly, avoid simply moving debt around and spreading it across different credit sources – this can serve to tangle you up further. Also, simply opening accounts to close them, unused, as a way of trying to manipulate your Credit History can actually lower a Credit Score in the end as it will mean you have fewer accounts with which to house what could quickly become a larger, lump-sum, debt than expected.

Remember, as stated at the top of this guide, there is no quick fix or short cut to improving a poor Credit Score/Credit History.

[bitsontherun 3moRhGxx]

064S – BAS

How to find out if someone is bankrupt…

For any business, large or small, chasing payments for outstanding invoices and balances takes up a great deal of time. Without making to sweeping a statement, clients and customers, no matter how amiable they are, often seem to prefer settling debts after they are due.

Put simply then, despite legally binding contracts and purchase orders, there’s still an element of the old gentleman’s agreement within any credit-based transaction. We can do all the background checks in the world, yet still there’s no absolute guarantee everything owed to us will be recouped within a reasonable time scale, if at all.

It’s a rather worrying prospect, and as such it’s always a good idea to try and protect yourself as much as possible against entering into financial agreements with the wrong type of person. Clearly unsavoury types should be avoided at all costs, but for many business owners people with a history of insolvency are also far from the ideal candidates to loan money or provide services to in trust.

There’s plenty worth criticising within this mind set of course. Bankruptcy is designed to eventually wipe the slate clean, or near enough, and so in all fairness individuals that have been involved in such situations should be afforded at least one more chance. From the other side of the table, though, it’s safe to say anyone willing to offer credit deserves to know the recipient’s recent monetary background.

Thankfully this isn’t hard to do. For starters, if you’re already waiting for payment from someone who becomes bankrupt it’s standard practice for the Official Receiver (a court appointed professional who oversees distribution of the debtor’s estate) to notify everyone who is owed money within 12 weeks. This is providing the money you are owed is directly involved within the insolvency case.

Which is all well and good, however once you’re in this situation realistically it’s already too late. The individual in debt to you has now filed for bankruptcy, and in many instances this will mean it’s unlikely all creditors will receive settlement of the full outstanding balance. So how do you tell if someone has already been in such dire straits before lending them money?

Again the answer is reassuringly simple, as bankruptcy is a particularly public declaration. For starters, this kind of action can be published in the press, and by law will appear in the London Evening Gazette, which isn’t hard to find. In addition, when a business goes bankrupt it’s also common for the details to be printed in the local papers. Further to this though, and arguably far more accessible, the case will be logged on the Insolvency Register for six years after the insolvency period begins, despite discharge from bankruptcy often taking place after 12 months.

If you know the area in which the person lives, or where the business is based, then the local county court at which the bankruptcy petition was filed will hold full records of the case too, accessible upon request. Any Individual Voluntary Agreements will also be held on the Insolvency Register and at the county court, however, unlike bankruptcy, there is no legal obligation for newspapers to publish the details. For the individual involved none of this is ideal, what with the social stigma attached to this kind of financial action, but from the perspective of an outside party looking to safeguard against losses, that this information is so readily available will be unarguably reassuring.

[bitsontherun C6eNnPY2]

How to file bankruptcy for a small business?

Despite common misconceptions, bankruptcy only actually applies to individuals. In contrast, when registered or unregistered limited companies, including those based overseas, can’t pay off creditors the correct term is ‘insolvency’. This is irrespective of the actual ‘size’, i.e. how many employees work for the organization.

In contrast, self-employed people use the standard process of applying for individual bankruptcy, for which separate guidance is available. As such the focus here is purely on companies dealing with debt, with the intention to provide an overview on the various types of insolvency currently available to businesses trading in England & Wales.

Much like bankruptcy, insolvency comes in two main types. Broadly speaking these are voluntary and involuntary. If you suspect your firm may be at risk of failing there are two important tests that should be carried out first, and these boil down to balance sheet and cash flow. If the business owes more out than it owns, the balance sheet is showing signs of failure. Similarly, if the company cannot afford to meet all required payments, and is not making contributions towards its arrears, then it can also be considered as an insolvent firm.

If this is the situation then there are several options open to management. For organisations with a turnover of less than £5.7million it may be possible to apply at a court for a Company Voluntary Arrangement. This can keep the day-to-day running of the firm in the hands of its owners, and acts in a similar way to an Individual Voluntary Arrangement. In short then, if the directors submit particular documents it’s possible to avoid further action being taken, arrange for more manageable creditor repayments, and continue to trade, providing the creditors agree to the terms.

The directors must file a proposal for the arrangement (i.e. how the company will pay off creditors, and over what length of time), a statement of company affairs, statement of eligibility for the CVA, and a statement from a nominee in which the nominee declares: “The proposed voluntary arrangement has a reasonable prospect of being approved and implemented, and the company is likely to have sufficient funds available to it during the proposed moratorium period to enable it to carry on its business.”

If that isn’t suitable then another option would be to file in court for an Administration Order. In this instance administrators will step in to manage the firm once a petition has been successfully submitted, and in effect the organisation will be protected from any further action with regards to being wound up, unless the court approves it. As such the firm is given time to rectify its situation, rather than being liquidated. When a lender takes this kind of action against a company in bad debt it is known as administrative receivership.

The final option would be to go into voluntary or compulsory liquidation, wherein trading immediately ceases, the firm is wound up, and its assets sold to pay off outstanding balances. In this instance again an application needs to be submitted in court. For compulsory liquidations £1,000 deposit and £220 fees also need to be paid to the court. In addition to this, costs for advertising the petition in the London Gazette will also need to be covered. For voluntary liquidation the price varies depending on which practitioner you use.