The moment you decide to lodge your own bankruptcy petition:
You will need enough time to plan ahead. You will need around four to six weeks to save approximately one month’s worth of cash to see you through a very difficult transitional period.
You will not be able to keep this in a bank. It will need to be kept in a safe place at home. I cannot stress enough how important this is. I am not joking when I say you may not have enough money to buy a loaf of bread the minute you walk out of the bankruptcy court. Stock your freezer to the brim.
This article is written by Joanne Wood who declared herself bankrupt in February 2006. From the age of 17 Joanne worked as a court reporter at the Central Criminal Court. She is the author of Bankrupt 130 of 2006 – a remarkably candid account of what happened to a family after bankruptcy.
You need to be able to feed your family, put petrol in the car and have enough money to buy a train ticket to work. Nobody tells you about this and quite frankly nobody really cares. It is vital that you continue to work after the bankruptcy hearing if you can. Make sure you have considered all your domestic outgoings for a month, at least, and that includes the dog food and baby’s nappies. If you are on an electric meter ensure you can afford to heat your home. More importantly you will need to have the bankruptcy fee (currently £495) to take with you on the day of your bankruptcy hearing.
How can I save that sort of money? I hear you ask. Next step:
During the weeks before the hearing only pay the most important bills, that is, your mortgage, rent, buildings insurance and home contents cover, home boiler insurance and your council tax.. Stop paying everyone else the moment you have decided this course of action (bankruptcy). You are wasting your money – fill up the fridge. Buy a second freezer.
Forget the gas, electric, water, Inland Revenue, and so on. These overdue bills can be listed as creditors and written off in the bankruptcy. You can start again from scratch. I did not do this. I continued to pay as many bills as possible before the petition was lodged. But that was a mistake: I would have been better saving my cash for food. The only thing I did do – which I still stand by – was pay the creditors threatening debt agency action in an attempt to keep bailiffs from my door. I had children and it was vital that they were protected as much as possible. I even drew cash from one credit card to pay another rather than pay nothing. Do not pay any unsecured creditors – credits cards bills.
If I had my time again I would have used any credit I had left on my credit cards to put four new tyres on the car, buy an extra school uniform in the next size up for the following school year and taken the whole family to the optician, dentist and hygienist. These are all luxuries and you will not be given a sufficient bankruptcy allowance to fund these. Any extras such as these will inevitably come out of your food budget which is determined by the Official Receiver, depending on the size of your family.
I know there will be critics who will frown upon this attitude but trust me, especially if you are self employed. You will have NO money and food will always be the main topic of conversation in the household during the bankruptcy period. There were many occasions when we struggled to feed ourselves and the children were always fed first.
For months I suffered with an infected tooth because I could not afford the dental bill. I really could not justify the dentist fees when we had so little food in the house. They were frightening times.
Honestly, it is outrageous. If I had gone to prison for murder I would have been fed every day. The meagre shopping allowance is not sufficient and food really is a luxury for some bankrupts.
You need to telephone the court for your bankruptcy hearing date. We phoned four weeks ahead. You may be able to book earlier, but be prepared that the court could be inundated with petitions, and you may have to wait several months. But the longer you have to wait the more time you have to save your money. This really is a case of survival.
Ask for the forms to be posted to you. These take a couple of days to arrive. These forms are to be taken with you on the day of your hearing so there is no need to rush them. Fill in the forms using a pencil first. You will make mistakes. Alternatively, you can fill the forms in On-Line. This may be a better option as you can start preparing them straight away.
If you have to pay court fees then you need to find this cash in advance. They take no form of credit and this payment has to be paid in full on your arrival before the proceedings can commence. We had to pay £920 for both of us. I drew this cash from a credit card. I decided to take this course of action rather than allow someone to make me bankrupt. It was paramount that I retained my dignity. I was adamant that no creditor would haul me into court. We made the decision to lodge our own insolvency petition.
The only benefit to allowing a creditor to make you bankrupt is that they have to pay the costs. But I strongly urge you to make this life changing decision yourself. It will give you time to make financial plans and save the required amount of money to cover your living costs. More importantly you take control of the situation which is vital if you are going to survive this next phase in your life.
On the day of your bankruptcy hearing I would suggest that you dress smartly for your court appearance. Look professional. Clean your shoes. Hold you head high. You are not a criminal.
On your arrival to the court you must check in at reception. This could be embarrassing. But stand tall. It’s no one else’s business. This is their job. They have seen and heard it all before.
The thought of bankruptcy for me was quite terrifying. As a young court reporter, twenty years earlier, I would sit squirming in the press bench at the High Court in London watching businessmen being interrogated about their financial misdemeanours in open court. They were branded incompetent as they hung their heads in shame. It was excruciating to watch. They must have felt so humiliated. Their penalty in those days was measured in years not months as it is today. I have no idea how they recovered from this terrible financial blow.
Thankfully bankruptcy is a different affair nowadays.
Once we had announced our arrival, we were asked to wait for a short time in reception before being invited into a side room.
The next twenty minutes was quite formal. The court official checked through all of the forms we had carefully filled out. Once she was satisfied she had everything, we were asked to swear an oath on the Bible confirming our identity. The large pile of banknotes we had brought with us was then counted. Documents and fees in order, we were then taken up several flights of stairs to a waiting room near to the court.
Fortunately for us, we did not enter the courtroom. We were directed into the judge’s chambers where the rest of the hearing was heard. This will vary depending on where you attend your bankruptcy hearing. Some may only hear the petitions in a courtroom; others will be flexible, as in our case.
The judge did not ask us why or how we had ended up sitting in front of him.
It was just a case of formalities. He was pleasant, sympathetic, and quite supportive. He took time to digest the informative documents, where we had given an explanation of our circumstances.
We sat in silence for most of the brief hearing. It was so quiet that you could hear the clock on the wall ticking. Before declaring us bankrupt, he again asked us if we were definitely sure this was the route we wanted to take. At no time did he judge us. It was so surreal.
Afterwards he wished us well and directed us back to the small office. There the assistant telephoned the Official Receiver’s office, and we were asked to both have a quick chat with them. We confirmed our bankruptcy numbers and arranged to be at home on a date that suited all parties, in approximately two weeks’ time.
Each debtor will be required to either attend an interview at a pre-arranged venue or like us be available at home for a phone call with the Official Receiver.
On the day of your interview make sure you have your copy of the list of expenditure in front of you and a copy of the petition form you filled in, accompanied by the list of creditors. If you have any pension or endowment policies that you still hold, get them out and have them ready in case they ask. But as I remember it, they ask few questions. Probably because they already have all the information you took with you on the day of your hearing.
They will ask you to confirm who you are, your address, if you still work, and very basic questions like this. They are not complicated. Just answer them as honestly as you can. They may ask you to send financial records and paperwork – for example, bank statements, etc. (photocopy everything you send in case you don’t get it back).
They may ask you for additional information about your assets and debts, and the facts and circumstances that led to the insolvency.
But I do stress here: if you have any of your own questions, ask them now. Write them down so you do not forget. It could be some time before you get a chance to speak with them as the Official Receiver’s office is more inundated than ever.
Yes, I know, this is a very daunting experience and you are probably terrified. But the truth is that all court staff are very polite, understanding and at no time judgemental.
You will get through this. Just accept that you cannot right things overnight. Read as much information on bankruptcy as you can. Ask as many people as you can about the procedure and most importantly keep the lines of communications open with loved ones.
my god, I was also going to make the same mistake… Thanks for this article Joanne. Thanks a ton.
Hello Rebekah
I am Jo Wood – author of the above article. I would love to know a little about you, how you came about ther article, what your circumstances are, what part of the country you come from. I may be able to assist.
kind regards
Jo
Hi Jo,
The fee for a bankruptcy application in Scotland is £100 and not £495… Perhaps you are not talking about Scotland – I guess
Sorry Rebekah and apologies to any scottish viewers. Yes, I was in fact taking about England and now you mention it I will investigate how different the scottish process is in general.
best wishes
Thank you so much for this article, it helped me understand more, I too was going to make loads of mistakes.