Bankruptcy and insolvency

Being made bankrupt is a serious matter. You will have to give up any possessions of value and your interest in your home.

If you are having genuine difficulty in making payments, you should contact the Professional Enforcement Team straight away and we will do our best to help you.

Professional Enforcement Team
Telephone: 020 8726 7000 option 2
Email: cdrpe@croydon.gov.uk

If you are struggling to pay your bill you can apply for Council Tax Support.

If you are worried about debts or have missed payments, there is free, confidential, and independent debt advice available.

Statutory demand

A statutory demand details the debts owing to us and is the first step towards making you bankrupt.

You are given 21 days to pay us the full amount. At this stage, we will not enter into a long-term arrangement. Failure to meet a statutory demand is a statement that you cannot pay your due debts and you are insolvent. The next step would be to make you bankrupt.

Costs can be considerable if the statutory demand debt is not settled and action proceeds with a bankruptcy petition. The closer you leave it to the hearing to settle the debt, the higher the costs. Settlement at the bankruptcy hearing could result in costs of over £2,000 payable by you.

The bankruptcy proceedings

A bankruptcy order can still be made even if you fail to engage in the proceedings. You should therefore co-operate fully once the bankruptcy proceedings have begun.

Disputing the claim

If you dispute our claim, you should try and reach a settlement before the bankruptcy petition is due to be heard. Trying to do so after the bankruptcy order is made, is both difficult and expensive.

You will be required to meet both the costs of the petition and to pay the Official Receiver's costs, and if a trustee in bankruptcy is appointed to deal with your affairs these costs could be several thousands of pounds.

The Official Receiver

The Official Receiver is responsible for looking into your financial affairs for the period before and during your bankruptcy. He or she may report to the court and has to report to your creditors.

Enquiries will also be made of banks, pension and insurance companies, solicitors, your employer, landlords and any other persons or organisations who may be able to provide details of any assets or liabilities that you have, or have had an interest in (either on your own or jointly with others).

If you own your home

If you own your home, your interest in the home will form part of your estate and will be dealt with by your trustee. The home is likely to be sold to go towards paying your debts, the costs of the trustee and any legal costs that may arise during the administration of your affairs.

The Trustee may sell your home if it’s the only way to raise money for your Creditors until your interest in the home is sold. That interest will continue to belong to the trustee, including any increase in its value which will go to the trustee to pay your debts.

Even if the home is sold some time after you have been discharged from bankruptcy, the increase in benefit will not be yours.

Restrictions when you are bankrupt

The following are criminal offences for an undischarged bankrupt:        

• Obtaining credit of more than £500 or more either alone or with another person, without disclosing your bankruptcy
• Carrying on business (directly or indirectly) in a different name from that which you were made bankrupt, without telling all those whom you do business the name in which you were made bankrupt
• Being concerned (directly or indirectly) in promoting, forming or managing a limited company, or acting as a company director, without the court's permission, whether formally appointed as a director or not.

Your assets

You will no longer control your assets. The Official Receiver, or an appointed trustee, will take control of all your assets on the making of the bankruptcy order. They will dispose of the assets and use the money to pay the fees, costs, and expenses of the bankruptcy and then your creditors.

You can keep the following items unless their individual value is more than the cost of a reasonable replacement:

• Tools, books, and other items of equipment which you need to use personally in your employment, business or vocation
• Clothing, bedding, furniture, household equipment and other basic items you and your family need in the home

The trustee may claim property that you obtain or which passes to you (for example, under a will) while you are bankrupt.

If you own a business

If you are self-employed, your business is normally closed, and any employees are dismissed.

Your wages

Your trustee may apply to court for an Income Payments Order (IPO), which requires you to make contributions towards the bankruptcy debts from your income.

The court will not make an IPO if it would leave you without enough income to meet the reasonable domestic needs of you and your family.

If you have an increase or decrease of income, the IPO can be changed. IPO payments continue for up to 36 months.

This page is a guide only and you are advised to seek independent legal advice.