Becoming bankrupt
Your money and income
You must give the person dealing with your bankruptcy (the ‘trustee’) details of your income and spending, as well as your spouse’s or partner’s. If you’re getting pension payments when you’re made bankrupt, those payments usually count as income.
The trustee will decide how much money you need to cover your expenses, including:
- rent or mortgage payments
- bills
- food
- clothing
- house insurance
- phone expenses
- vehicle expenses
You can get free debt advice on managing your money and how bankruptcy affects your credit rating.
If you have spare income
The trustee will tell you if they think you can make monthly payments from your spare income. You’ll only have to do this if you and the trustee agree you can afford it. This arrangement can last for up to 3 years and is called an income payments agreement (IPA).
If your main or only income is from state benefits, your trustee will not normally ask for an IPA.
If you do not agree to the IPA
Your trustee can ask the court to order you to make monthly payments. This is called an income payments order (IPO).
If you hear from an agent about making payments
The trustee could use Advantis Credit Ltd or another agent to collect the payments from you.
You must respond if an agent contacts you.
If your income or spending changes
You must contact your trustee or Advantis Credit Ltd immediately if:
- you are having difficulty making payments
- your income or spending change - they can reduce or increase your payments
- you receive a lump sum - they can ask you to make a one off payment
If you do not make your payment
The trustee can:
- ask your employer to take the money directly from your wages
- make you bankrupt for longer (‘suspend your discharge’ from bankruptcy)
- take legal action to get the money
Debts you’ll still have to pay
When you’re bankrupt you must continue to pay:
-
debts you have from fraud you’ve carried out
-
debts which were not included in the bankruptcy itself, for example to the Student Loans Company
-
secured debts, like a mortgage if you continue to live in a mortgaged property
-
money owed to the Department for Work and Pensions for budgeting or crisis loans
You might still have to pay:
-
anything you owe under family proceedings, like child maintenance debts
-
damages for personal injuries to anyone
You’ll have to pay them unless the court decides you do not have to.
Your bank accounts
The bank will usually freeze your accounts.
Your trustee will tell your bank to let you have any money you need urgently from your account, for example to buy food.
If you have money that also belongs to someone else, for example in a joint account, their money will be given to them.
Your bank will decide whether you can carry on using your accounts. Ask your bank what to do with your bank cards, cheque books and credit cards for any accounts you’re no longer allowed to use.
Your bank can use money from your accounts to pay other debts you hold with them. This is called ‘set off’.
Your pension
After you’ve been made bankrupt, you can usually keep any money you’ve previously put into a UK pension.
Speak to your trustee or a debt advisor to find out how bankruptcy will affect your pension. Find out where you can get free debt advice.