What Life Really Looks Like After Discharge From Bankruptcy
Being declared bankrupt seems like a daunting prospect, but it doesn’t have to be. Read on if you want to know more about life after discharge from bankruptcy.
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What is bankruptcy discharge?
After your bankruptcy period, you are freed from restrictions and your debts are cleared. This is called the discharge from bankruptcy.
The discharge usually takes place after a year. However, this could be delayed if the official receiver suspects that you have not provided all of the necessary information in full. This is called a “delayed discharge”.
What will change after the release?
Life after landfill is a good opportunity to erase the slate. However, there will be some important changes that you should be aware of.
There are debts that cannot be settled through bankruptcy. You will have to take responsibility for paying them in full.
These debts include those acquired through fraud, maintenance payments, personal injury, student loans and court fines.
You will also be responsible for all debts accumulated after bankruptcy.
Your bankruptcy will remain on your credit report for six years following its declaration.
If you are applying for credit, lenders will check your credit rating and you could be refused. Even if you are not refused, you may be offered products with lower interest rates because you will be considered a high risk.
Even after six years, some financial institutions may ask you if you’ve ever been declared bankrupt. It is common when apply for a mortgage.
Revenue Payment Agreements (API)
Being bankrupt, you may have been asked to make regular payments. This is usually based on any disposable income, which could include your pension if you were receiving one when you filed for bankruptcy.
When you enter into an agreement to make these payments, it can last up to three years.
All property seized and not used to pay off debts will remain under the control of the court even after discharge from bankruptcy.
You no longer own these assets and they could be used to pay off your debts in the future, even if they are in your possession.
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If you have more than £ 1,000 of equity in your home, the official receiver can get an imputation order on the interest in the property.
This order will remain in effect for up to three years, during which time the property may be sold. If after three years it remains unsold, it will be returned to you.
What should I do once unloaded?
After discharging from bankruptcy, there are some important steps you need to take.
Get the proof
The discharge takes place automatically after one year. There is no official letter or confirmation of any kind.
It is a good idea to get proof that you have been released. You will need to contact the Insolvency Department and request a confirmation letter.
The location of the insolvency service you should contact will depend on where you live. More information on how to contact the insolvency service is available on the gov.uk site.
You may also need a clearance certificate, especially if you are applying for a mortgage. It will depend on where you filed your bankruptcy application.
If you have filed a claim with the court, you will need to contact the court and pay the £ 70 fee (and £ 10 for each copy). If you applied online, you will need to email the Insolvency Department. There is no charge.
Consult all public registers
You will need to check the Insolvency register to make sure your name is deleted. This will happen within three months of your release.
If your debts have been settled, you can ask the Land Charges and the HM Land Registry to remove your bankruptcy registration. More information is available on the gov.uk site.
Work on improving your credit rating
If you were to close your bank account, you will need to open a new one. You should be able to do this, but you’ll probably have to settle for it with basic functionality.
AT improve your credit rating, you will need to adopt good spending habits. In a year or two, apply for a credit card and use it to pay for things like your groceries. Make sure you pay the balance in full each month.
Bring back home
Try to see your situation as an opportunity for a fresh start. Think about why you found yourself in this situation in the first place.
Identifying the source of the problem is a good first step towards adopting good spending habits and making sound financial decisions.
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