Can My Bankruptcy be Cancelled? The facts and a Salutory Warning

rog2

Most people, myself included, who have been declared 'Bankrupt', have only been so declared because there simply was no alternative course of action to 'remedy' an otherwise insolvable situation.
For most, Bankruptcy is an extremely daunting process and is, rarely, undertaken without first having sought, and acted upon, professional advice.
Whilst many of us, certainly the majority who post on this forum, will put on a brave face and look forward to the 'Fresh Start' that the protection of 'Bankruptcy' promises us, often the truth is that, once confronted by the actual facts of Bankruptcy, we are in fact at our lowest ebb - we see our 'financial freedom' disappear, our personal relationships placed under extreme pressure and, sometimes, our very livelihoods taken away from us.
It is, often, at this point, that people are at their most vulnerable.

Incredible as it may seem, and just as we are contemplating 'coming to terms' with our new situation, we are suddenly inundated with letters from 'Debt Management Companies', 'Solicitors' and 'Insolvency Practitioners' offering us the chance to 'Reverse or Annul' our Bankruptcy.
Small wonder that many of our number are 'tempted' by the chance to, effectively, 'put the clock back' - indeed, one may ask, why, if it can be reversed so simply, would anyone feel the need to accept Bankruptcy in the first place?

Let us, now, look at the facts:

What is the 'Annulment' of a Bankruptcy Order?

It is a process that cancels your Bankruptcy Order. An order of annulment can only be made by the Court.

A Bankrupt may apply for an annulment order at any time if:

• the Bankruptcy order should not have been made, for example because the proper steps were not taken when obtaining the order: or
• all your bankruptcy debts and the fees and expenses of the bankruptcy proceedings have been paid in full or secured (guaranteed) to the satisfaction of the Court: or
• you have reached an agreement called an "Individual Voluntary Agreement" with all of your creditors to repay all or part of your debts.

If all the Bankruptcy debts have been paid in full, or security has been given then you need to apply, under Section 282 (1)(b) of the Insolvency Act 1986.

(Please note - as any personal assets now form part of your estate in bankruptcy, these may not be used, so, unless you have been 'discharged' from bankruptcy, third party funds, only, must be used. If you are 'discharged' you may use your own money.)

If your creditors have agreed to an "Individual Voluntary Agreement" under Section 261 of the Insolvency Act 1986 you can apply to the Court, for 'Annulment'. Your application must be made no sooner than 28 days after the Insolvency Paractitioner has reported the result of the Creditors' meeting to the Court.

If your creditors have agreed to a 'Fast Track' voluntary arrangement, under Section 263D of The Insolvency Act 1986 you must nominate the Official Receiver to deal with your proposal.
Only if the Official Receiver believes that your offer has a reasonable chance of being accepted will he/she invite your creditors to consider it.
If your creditors agree to your proposal, then the Official Receiver will report that decision to the Court and, after 5-7 weeks, will apply for the bankruptcy order to be annulled.

What is the effect of the annulment of a bankruptcy order?

An annulment has the effect, in Law, that the bankruptcy order was never made. You will revert to your pre-bankruptcy status.
However disposals of your property by the Official Receiver and/or Trustee will remain valid and will not be reversed. Any other assets will be returned. You will remain liable for any debts that were not paid in the bankruptcy.

The above information has been 'condensed' from the Insolvency Service Leaflet "Information on annulment of a bankruptcy order" and the full document can be seen, and downloaded, on the following link:

http://www.insolvency.gov.uk/pdfs/guidanceleafletspdf/Canmybankruptcybecancelled.pdf

Those are the facts, now follows the warning:

We live in a world where situations are viewed as no more than 'opportunities for exploitation' and nowhere is that more evident than in the area of 'debt'. This is, unfortunately, evident throughout the process of 'debt' from those companies that convince consumers that they 'need' or 'must have' something and that, with the 'help' of 'credit' the consumer need not wait until he/she an actually 'afford' to purchase the item or service, thereby creating the 'debt'. This continues, right through the process, including 'companies' who, for a profit, will offer the consumer 'help' when that consumer finds that he/she is having problems funding the original debt - usually by increasing their level of debt.
So it should come as no surprise to find that 'Bankruptcy' is no exception - it is just 'another situation' that can be, potentially, exploited for profit - indeed, the strictly defined criteria for the 'annulment of bankruptcy' make it a rich 'feeding ground' for many of the less desirable elements of those who are well trained in 'exploiting' legislation for personal gain.

We are not going to be able to stop these 'people' from contacting us under the guise of offering us a 'service', but we can make ourselves aware of exactly what our options are, in order to avoid becoming, unwittingly, enticed into a situation that could involve even worse 'debt problems' than we faced prior to bankruptcy.

Thanks for reading.

Pobby

Great post.

PennyLane37

Food for thought... thankyou...

But here's a question.. if for example you were gifted an amount of money which would clear all the debts and fees to the courts satifaction and the bankruptcy is reversed... why does the OR hang onto to the dealings in the property?? what is the point if the debt has been cleared in full?? and surely that would be the main point of doing it if you could to gain control back... and not have the worry about the potentially loosing the property?

or am I reading that wrong?
Please help?

debtinfo

They dont hold onto your property if you get an annullment.

Just wanted to add a couple of points to the original post

1. It is advisable that you do see an IP, accountant or solicitor before applying, there are many pitfalls and a strict process and so good advice is essential

2. Having said that it is never a good idea in any area to go with somone who posts a flier or cold calls you, the good well respected firms dont need to.

3. Annullment is always at the judges discretion even if you have paid all of the debts, so bare that in mind in your approach to the OR and to the court

Ineedaname

Not sure if it's still current, but very useful information nonetheless. Thank you.