Avoid having to complete your forms twice

It is very much in your interests to take the time to ensure that your bankruptcy petition and statement of affairs are thoroughly completed prior to your hearing.

The court clerk will ensure that you have answered every question on the forms, but they will not check the content of your answers. If the statement of affairs does not contain sufficient information the official receiver may require you to complete another full statement of affairs.

Establishing the owner of a car

Before the official receiver can take any action regarding a vehicle he or she must be certain that it is actually the property of the bankrupt. The registration document of the vehicle only confirms who is the registered keeper, it does not prove ownership.

If the ownership is unclear the official receiver will ask the bankrupt and any third parties involved to produce further evidence of ownership e.g. a purchase invoice, a copy of the loan agreement, or a bank statement showing transfer of funds etc.

Where the vehicle proves to be the property of a third party the official receiver cannot take action to realise it on behalf of the creditors. This applies in cases where the bankrupt is shown as the registered keeper of the vehicle but it was actually purchased by a parent or spouse.

The ups and downs of the road to freedom

There are several key moments that stand out during the bankruptcy experience. Realising that you have to go bankrupt is the first big one. For me the next one was informing my family and friends. Next up was informing my employer and handing in my resignation (which was an inevitable consequence as I was working for a bank).

The next major task was completing the bankruptcy forms. I seem to remember it taking a long time, mainly because I had decided to cover everything I could think of. Then there was the waiting for the hearing - two weeks in my case due to the local court being so busy.

The hearing itself is another key moment, but I have to say I look back on this one fondly. Walking into court with a huge amount of debt, and walking out again free of the burden. However, the next part was the mountain peak for me - the official receiver interview. I didn't look forward to it, I certainly didn't enjoy it, but once it was over I knew it was going to be downhill all the way.

Next was the trustee interview - a walk in the park after experiencing the official receiver interview. For me there was then a period of unemployment. Probably extended too long due to my decision to be upfront about my bankruptcy. That choice certainly backfired, I eventually gained employment from the first company I did not divulge my bankrupt status to.

The final memory is obtaining early discharge - truly free from debt and fully back in control of my life once again. The whole experience complete in under 12 months. One year where I was relieved that time flew by.

Should I be completely honest?

Simple answer... YES. Bankruptcy provides the ideal opportunity to get everything out in the open once and for all. Try not to be afraid of admitting any mistakes. It's much better deal with any issues now than sweep them under the carpet and leave them ticking away like a time-bomb ready to explode at some future date.

Provide whatever information you are asked for. Even if you are scared of the repercussions and feel you may have made an error of judgement, it really is best to bring it all to a head. The official receiver and trustee who deal with your case are very good at uncovering the truth, so by hiding something you will probably be only delaying the inevitable anyway.

Be up front, co-operate fully, and you could well find yourself discharged early. Be evasive and obstructive and you may well find the term and restrictions of your bankruptcy extended. Go on - make it easy on yourself, and relax in the knowledge you can enjoy your fresh start without any lingering worries.

Will I go to prison for fraud?

In the second it dawns on you that you can't avoid bankruptcy it's easy to feel hugely overwhelmed. The fear of the great unknown is enough to send shivers down your spine. I remember the feeling vividly. A barrage of questions filled my head, most of which I had absolutely no answers to.

One big fear was the possibility of losing my freedom. At times I hadn't given a 100% accurate picture of my finances to my creditors. Had I committed fraud? Would I go to prison? When you are ignorant of the facts as I was you literally believe any number of horrible experiences maybe awaiting you.

The fact is that bankruptcy is not a criminal offence. If you are found to have been in some way to blame you may have the restrictions of your bankruptcy extended for anything up to 15 years, but prison isn't on the agenda. Although there is a form of criminal bankruptcy such cases are very rarely seen.

So relax - your liberty is extremely unlikely to be at risk. In fact you are probably more likely to gain your freedom.

Behaviour leading to a bankruptcy restrictions order

The official receiver looks closely at all of your conduct both before and after the bankruptcy order. He or she will report to the court any actions that could be considered dishonest or blameworthy in relation to your affairs. The following types of behaviour could lead to the imposition of a bankruptcy restrictions order:

• Incurring debt you knew you had no reasonable chance of repaying
• Giving away or selling assets at less than their value
• Deliberately paying off some creditors in preference to others
• Gambling or making rash speculations, or being unreasonably extravagant
• Failing to keep or produce records that would explain a loss of money or property
• Fraud or fraudulent breach of trust
• Causing the increase of debt by neglecting your business affairs
• Failing to supply goods that have been paid for
  
• Carrying on a business when you knew or should have been aware that you could not repay your debts
  

'Reasonable domestic expenses' in an IPA

The official guidance from the insolvency service lists the commitments considered to be 'reasonable domestic expenses' when calculating your surplus income for the purposes of an income payments agreement.

Your mortgage or rent payment, food, heating and lighting, and clothing are all included within your normal monthly expenses. In addition the following commitments can also be treated as part of your domestic needs:

• TV and video hire, TV licence
• Home insurance
• Car insurance and car tax (where car has been exempted by trustee)
  
• Car breakdown cover
• Membership of a professional body needed for your employment
• Prescriptions / dental treatment / opticians
• Child maintenance or Child Support Agency payments
• Mobile phone (at a reasonable monthly cost)
  
• Dry cleaning

The list is not exhaustive, other expenses can be considered.