Bankruptcy may not be end of the world
The number of bankruptcies seems to be on the increase. This is no great surprise when we hear so much about how business is down and people are losing their jobs
Being made bankrupt is a matter of public record and bankruptcies appear each Friday in the Belfast Telegraph and The Belfast Gazette.
These notices are almost required reading for accountants and solicitors who need to keep abreast of what’s happening and to whom.
You will find the listings in the second half of the paper, at the start of the public notices advertisements, before the sport.
In the Belfast Telegraph they are generally published in a box about 10cm wide and 20 to 30cm long.
Of course the box size is dictated by the number of people being made bankrupt each week.
This sort of public notice will not appear at times when the courts are not sitting like major holidays.
Bankruptcy notices list the full name of the person and the date of their bankruptcy. It also lists their full address and any trading names or business addresses they used. If you want to search online for bankruptcies in Northern Ireland there is a charge of £20 per search.
The relevant part of the Court Service website can be found at http://tinyurl.com/cqufu4
By way of contrast if you want to search for a bankruptcy in England or Wales there is a free search facility where you just input the surname. If you know the first name you can also add it.
The list then shows up the address of the person made bankrupt.
Bear in mind that this only shows people who are currently bankrupt or have been discharged within the past three months. The free online search is at http://tinyurl.com/hej4p
In general a first bankruptcy will last for 12 months after which time you are automatically discharged.
A broad way of looking at bankruptcy is that it is a way of escaping debts you have no chance of handling, and then making a fresh start. Note however that some debts like mortgages can be more complicated.
Your house may have to be sold as part of the job of realising your assets to pay your debts.
A family member might be able to buy out your share of the house, so you may not have to move out.
Alternatively a charge may be placed on the house which continues beyond the discharge from bankruptcy.
This would mean that when the house is eventually sold some or all of the proceeds are used to pay this debt.
So what are the effects of a bankruptcy? For fuller details you should check out the Insolvency Service part of the DETI website. A good leaflet on Bankruptcy is at http://tinyurl.com/c2jfw5
- You will no longer have control of your assets, house, investments, bank accounts and credit cards.
- While undischarged you will not be able to apply for credit without informing the lender that you are bankrupt — to do so is a criminal offence.
- If self-employed your business will be closed and all debts to and from the business are part of your estate. (See details about starting up again).
- You will not escape certain debts such as student loans, child support or overpaid social security benefits. The latter may be recovered from any future benefits you claim.
I said previously that your self-employed business is closed on being made bankrupt. That is not to say you must spend the rest of your days sitting at home feeling sorry for yourself. You can start back in business if you wish.
The tax people will give you an entirely new tax reference so your new tax bills do not get mixed up with the old ones. Of course you may find it hard to get an overdraft or a credit card, but you should be able to open a basic bank account. You may not get a cheque guarantee card at first.
Bankruptcy is not something to drift idly into. It may not be appropriate for you, and indeed you could end up being worse off as a result of fees and charges associated with bankruptcy.
On the other hand for many people bankruptcy gives them a chance to wipe the slate clean after some unfortunate time in their life, and make a fresh start.
If you are facing bankruptcy, or considering voluntarily making yourself bankrupt, you should take advice first. Insolvency practitioners are in most major towns, as are solicitors and the Citizens Advice Bureau.
Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co — www.hustontax.com or 028 9080 6080.