When you are declared bankrupt, the amount that your creditors are paid will depend on your financial circumstances.

Income Payment Order

The Official Receiver will review your income and reasonable living expenditures. If you have more money that you need to live on you will be asked to pay this towards your creditors each month. This payment is called an income payment order (IPO).

If you have an income payment order, it will last for three years from the date of your bankruptcy.

If you are not given an income payment order straight away but your income improves while you are bankrupt, then you may have to start making payments at that time.  However if you have been discharged from your bankruptcy and an IPO is not already in place, such an order cannot then be taken out against you.

Assets

If you own anything of significant value, you will be required to sell these items and the money given to your creditors.

Normal household items
Generally you will be allowed to keep all of your normal household items. This includes your TV, DVD player, washing machine, fridge freezer and sofa etc. It will be very unusual for the Official Receiver to take anything from your home unless you have any particularly valuable assets such as art or antiques.

Vehicles
You are allowed to keep a car that you need as long as its value is not more than £1500. If your car is worth more than £1500, you may have to sell it and buy a cheaper vehicle. Alternatively a third party can pay the difference to the OR and you can keep the car.

House
If you own a property with equity of less than £5000 it is highly likely that you will be able to keep it. However, if the equity is greater than this, the official receiver may force you to sell so that your share of any equity can be given to your creditors.

If you are a homeowner, bankruptcy can be a very serious matter. As a homeowner, you must not proceed with bankruptcy without first taking professional advice.

How to Start

Got a question? Why not use the Bankruptcy Forum which gives you direct online access to debt management experts

Call us now on 0800 077 6180 to discuss how Bankruptcy could solve your debt problem