• Unsecured loans.
• Tax and Vat bills.
• Credit cards and store cards.
• Catalogue accounts.
• Any unpaid bills.
• Debt subject to County Court Judgments.

The bankruptcy trustee is an insolvency practitioner appointed by the court to administer the process. Many people feel a burden is lifted when the bankruptcy trustee takes control of their finances.

We are not suggesting bankruptcy is without stress, however negotiating with many creditors at the same time and fear of the unknown can be worse.

If your client becomes bankrupt, normally, they would not be required to make contributions from income for more than 3 years.

If an informal arrangement is agreed, (as in debt management) debts are repaid in full - no matter how long this takes.

In the case of a formal arrangement, (as in an IVA) your client would normally be required to make payments from income for 5 years and, if applicable, re-mortgage their home to free up equity in the final year.

Your client will almost certainly lose all assets of value that can easily be sold off.

Some items are exempt, for example, equipment needed for work and basic domestic needs. Some items may have to be exchanged for items of lower value, eg trading in an expensive car for a cheaper one.

If there is equity in your client's home, then their share of it can be claimed as part of the bankruptcy estate. This may lead to the house being sold if it can't be arranged for someone to buy out that share.

Even if the house is in your client's spouse/partner name, the Bankruptcy Trustee may be able to claim it. Typically 50% of equity in the family home is available to the Trustee.

Any assets gained during bankruptcy has the potential to be claimed by the Trustee. This includes windfalls in general and anything bequested in a will.

Something of little value at the time of the bankruptcy order, but rising in value may also be seized by the Trustee.

If there are mortgage arrears, they property may still be repossessed by the mortgage lender.

A landlord can still be able to enforce a court order for non-payment of rent. Also, your client needs to be aware that becoming bankrupt may violate the terms of their tenancy agreement.

If the person runs their own business and it is of value, it will be sold. Otherwise it will be shut down and the employees dismissed. This does not apply in the case of a self employed sole trader.

The personal finances of the debtor and their conduct in relation to them, will be investigated by public officials.

Becoming bankruptcy is not a crime, but if evidence of fraudulent for irregular activities are found, criminal proceedings may follow.

Credit rating will continue to be adversely effected after bankruptcy discharge, potentially disenfranchising your client from many financial products and services.

Ex-bankrupts must be declare themselves as such when applying for a mortgage at any time in the future. Your client may find it difficult to obtain a mortgage, especially at the most completive rates offered to other consumers.

While serving bankruptcy, there are restrictions on a persons financial activities and they are barred from practicing some professions, hence potential loss of job.

These include, but are not restricted to:

• Serving bankrupts may not obtain credit of £500 or more in total, without disclosing bankrupt status. This includes ordering goods on credit.
• Bankrupts may not be, or act as the director of a limited company, or be directly or indirectly involved in the formation, running and management of a limited company.
• If the bankrupt is a sole trader, they may operate under a new trading name, but must advise those who they have business dealings with of their bankruptcy status.
• Industry professional rules make it more or less impossible for a bankrupt to practice as a Solicitor or Accountant.
• Bankrupts may not practice as an Insolvency Practitioner
• Bankrupts are not permitted to join the Police or Armed Forces while bankrupt. There are implications for those in certain roles who become bankrupt whist already serving in Police/Armed Forces.
• Bankrupts are not allowed to act as a Charity Trustee unless they are a director of that charity and have the Court's permission to continue the role.

If the Trustee considers the individual to be blameworthy, reckless or dishonest in their financial affairs and this contributed to the bankruptcy or the extent of the bankruptcy, then a Bankruptcy Restriction Order can be made against that individual. This prolongs restrictions on the bankrupt's activities.

Reasons for a BRO include, but are not restricted to:

• Incurring a debt with no reasonable expectation of being able to repay it.
  This includes increasing debt on credit cards.
• Gambling or unreasonable extravagance which contributed to the bankruptcy.
• Entering into a transaction at an undervalue.
  This means giving away items, or selling them at less than their true value. It is a myth that a debtor can give away possessions just before bankruptcy in an attempt to exclude them. Any transaction can be reversed upon court order.
• Failing to account satisfactorily for a loss of property to meet debts.
  If a property is sold up to 2 years before the bankruptcy order, the debtor must be able to account for the monies.
• Entering into a preference.
  Making payments to some creditors in preference to others. Debtors are not allowed to repay debts to friends / family members, while ignoring debts to other lenders.
• Fraud or fraudulent breach of trust.
  This usually refers debts resulting from stolen money from an employer etc and can also lead to a prison sentence.
• Making excessive pension contributions.
• Neglecting business affairs
  Where this caused the bankruptcy, or made the extent of the bankruptcy worse.
• Being been made bankrupt on a separate occasion in the past 6 years.
• General lack of co-operation with the Official Receiver.

All debts to creditors are (normally) written off in bankruptcy and some not relating to borrowing, however some debts will survive bankruptcy.

• Secured Debts
  The debt is enforceable only if it remains secured on that asset. If the asset was sold to provide funds towards the bankruptcy, but did not cover the amount owed, then that debt is no longer secured and therefore not enforceable.
• Benefit and Tax Credit overpayments.
  Where overpayments are made before the bankruptcy order, but a decision is made to recover them after the bankruptcy order, then the debt remains after bankruptcy discharge.
  In the case where the overpayment is made and recovery sought before the bankruptcy order then debt is included in the bankruptcy. The exception to this is overpayment due to fraud, in which case recovery can by enforced despite bankruptcy, regardless of when the overpayments were made.
• Council Tax
  Bankrupts are liable for council tax for the remainder of the current year if not served with a liability order or final demand.
• Child Maintenance
  Liabilities from an order made in a family or domestic court, such as CSA claims for child support are outside of bankruptcy.
• Student Loans
  Most educational loans cannot be discharged as they fall outside of the Insolvency Act 1986.
• Court Fines
  Court Fines imposed for an offence and liabilities from a confiscation order made under S.1 of the Drug Trafficking Act 1986 0r S.71 of the Criminal Justice Act 1988
• Personal Injury Claims.
  Debts from personal injury claims made against the individual are outside of bankruptcy.
• Fraud
  Debts arising from fraudulent conduct are outside of bankruptcy.
• Any credit obtained just before bankruptcy
  Last-minute credit obtained with little intention of respecting the credit agreement can be excluded and/or result in a bankruptcy restriction order.

• Interest
  Debtors may be liable for interest payable on any of the above debts.