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Bankruptcy FAQ

The following is a list of frequently asked questions about Debt Management services.

  1. I have an endowment policy, will the official receiver force me to sell it?

  2. Will I lose my home?
  3. Which creditors get paid first?
  4. What is an Annulment of a Bankruptcy Order?
  5. What is “Discharge from Bankruptcy”?
  6. After being discharged from bankruptcy, are there any debts which are not written off and for which I can be pursued?

 

  • I have an endowment policy, will the official receiver force me to sell it?
    This will depend on whether your endowment policy is 'charged' to your mortgage, as would be the case if you had an Endowment Mortgage.

    If it is part of an Endowment Mortgage, then it will fall under the control of the Official Receiver as an asset and be claimed. In which case the monetary value of the policy will be released by surrendering it or selling/auctioning it on the secodn hand market.

    The length of time the policy has been running, as well as the type of policy it is i.e. with-profits, unit-linked, unitised with-profits, will dictate the course of action to be pursued. Generally speaking, if the policy has been running any length of time it is likely to be sold to pay your debts.

  • Will I lose my home?
    Your home may have to be sold to go towards paying your bankruptcy debts. This applies whether your home is solely or jointly owned.

    If your home is mortgaged, whether you have kept up your mortgage payments or not, your lender should be notified of your situation and impending bankruptcy.

  • Which creditors get paid first?
    Once the Official Receiver/trustee has claimed all saleable assets, your creditors will be paid out in the following order:

    1. Bankruptcy expenses incurred by Official Receiver or Insolvency Practitioner
    2. Expenses related to property sale (e.g. estate agents)
    3. Any income tax owed for the year prior to bankruptcy.
    4. Any income tax payable for an on behalf of subcontractors
    5. Any VAT owed for the periof of 6 months prior to the bankruptcy.
    6. All other taxes owed fromthe year prior to teh bankruptcy (e.g car tax).
    7. Any National Insurance contributions from the year prior to bankrutcy.
    8. Any wages owed to employees for the 4 months prior to the bankruptcy.
    9. All other creditors.

  • What is an Annulment of a Bankruptcy Order?
    An order of annulment can only be made by the court and is a procedure which cancels a Bankruptcy Order.

  • What is "Discharge from Bankruptcy"?
    This is the process which releases you from the bankruptcy order and most of the debts which you owed when the order was made.

  • After being discharged from bankruptcy, are there any debts which are not written off and for which I can be pursued?
    There are a number of debts which can still be enforced if not fully paid under the bankruptcy order:

    1. Court fines such as maintenance orders, Child Support Agency payments and any other fines made through family courts.
    2. Any debts included int he bankruptcy whcih were connected with fraud.
    3. Money owed to the Student Loans Company
    4. Any debts connected with or arising from personal injury claims.
    5. State benefit overpayments
    6. Secured Creditors.

    However, the discharged bankrupt can request the courts permission not to pay the debt being pursued on the grounds of having recently being discharged from the bankruptcy order. Unless the pursued debt is related to fraud, the court can grant the request at its discretion.

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