GOING BR what are the implications?

fiveyearplan

I'm thinking of going BR but after reading through some of these threads am confused. How come some people are discharged earlier than others? When you are discharged do you stop paying all your old debts? Do you actually have to pay your debts? I thought that was the bonus of going BR.

Advice gratefully accepted.
TIA.

fermi

I can imagine it is confusing.

Firstly, since 2004 the standard period of bankruptcy is 12 months upon which normally a bankrupt will receive 'Automatic Discharge'.

However if your case is relatively simple there is provision in the new legislation for the Official Receiver to give notice to the court to grant you discharge earlier (Early Discharge) if they decide that further "investigation of the bankrupt's affairs is unnecessary or concluded". This can occur any when from 5 months up to shortly before the 12 months normal period.

You stop paying all your old debts that can be included in the bankruptcy as soon as the BR order is made since the OR then takes over the administration of these. You may then (depending upon surplus income) be asked to pay a percentage of your spare income towards these debts to the OR/Trustee for a period of 36 months under an Income Payments Agreement. For most people (if they even have to pay one at all) this will amount to only a very small fraction of the total debt.

You can read about IPA's here: http://bankruptcy.informe.com/income-payment-agreements-ipas-dt18.html

Other useful factsheets can be found at: http://www.insolvency.gov.uk/guidanceleaflets/Guides.htm

fiveyearplan

Thanks Fermi. I'll look at those sites. Yes, it is all very confusing!