What happens when you declare bankruptcy?

For most people, the aim of bankruptcy is to remove your debts and get your creditors off your back, but what happens once your bankruptcy is accepted can be a point of stress and uncertainty. Some people are worried they will have to go to court, and others are unsure of what their obligations are. We have compiled a short list of what happens immediately after your bankruptcy is accepted.

Once your bankruptcy has been accepted, you will be provided with a bankruptcy administration number. This is your official bankruptcy number that is attached to your bankruptcy estate. Once your details have been entered into the system the trustee will decide if they need any more information from you based on your answers provided in the bankruptcy paperwork. The trustee may need more information regarding any businesses you have operated in the last 5 years, or any large payments made to creditors within the last 12 months.

You will receive your official bankruptcy notification with 1-2 weeks of your bankruptcy being accepted. This is sent via email or by post, depending on your preference. This document shows the debts you listed in your bankruptcy paperwork, and also outlines your obligations as a bankrupt. This is a handy document, as it can help you to deal with your creditors.

Your creditors should receive their bankruptcy notification within 2-3 weeks. This notification informs them that you have declared bankruptcy, and you are no longer required to make payments (provided the debt is unsecured and eligible) From here, any contact or direct debit payments from your creditors should cease. If you are contacted by your creditors beforehand you can provide them with your bankruptcy administration number, and their contact with you regarding the debt should stop.

Keep in mind, your debts are not paid out when you declare bankruptcy. Your creditors will have the option to make a claim against your bankruptcy estate. Any funds or assets that breach the thresholds will be distributed amongst your creditors. If it is deemed that your income breaches the threshold, you will be contacted by a contributions manager, and they will inform you of the amount and schedule of your repayments. If you have assets that breach the threshold, you will be contacted by the trustee arrangements will be made to surrender or sell the asset, with the funds going towards your bankruptcy estate.

From here it is smooth sailing. You will be required to update the trustee with any changes to your situation, such as a change of income or job, contact details or living arrangements. Once your bankruptcy period is complete, you will be automatically discharged from bankruptcy