3.1 What are the conditions for applying for my bankruptcy?
If you have decided that you want to make yourself bankrupt you must meet the following conditions -
- You must owe a total debt of £1,500 or more and
- You must be living in Scotland or have lived in Scotland sometime during the last year and
- You must not have been made bankrupt in the last 5 years and
- You must pay the application fee and
- You must meet one of following conditions -
Either
One of your creditors is willing to agree to you making yourself bankrupt - this is called creditor concurrence. Your creditor has to sign a special form to confirm their agreement;
Or
You are apparently insolvent - apparent insolvency is a legal term that shows you cannot pay your debts as they become due. A creditor must have gone to court and obtained a ruling that you owe the debt to the creditor. The most common types of evidence used to prove apparent insolvency are -
- A Charge for Payment - this is a legal document with thewords 'Charge for Payment' at the top. It means that you owe money to your creditor and that you should pay themwithin 14 days. If you do not pay within this period, theCharge for Payment expires and can then be used to prove apparent insolvency.
- A Statutory Demand - this is a legal document with the words 'Statutory Demand' at the top. It gives you notice that your creditor may make you bankrupt if you do not pay what you owe them. A Statutory Demand expires after 21 days. If you do not pay within this period, the Statutory Demand can be used to prove apparent insolvency.
(Both of these documents are normally delivered by a Messenger-at-Arms or a Sheriff Officer.)
Or
You have low income and low assets (LILA) - this is a routeinto bankruptcy for people who cannot prove apparent insolvency or get creditor concurrence.
3.1.1 What does Low Income Low Assets mean?
Low income means gross weekly income of no more than the standard national minimum wage for a 40 hour working week. [Updated in line with the October 2008 increase] this is equivalent to £229.20 a week. Any pensions or maintenance payments that you receive are also counted in with your income.
If you receive income support, income-based jobseekers' allowance or working tax credits you will be treated as meeting the low income test, even if your actual income is more than £229.20 a week.
When calculating your income no account will be taken of other social security benefits or tax credits you receive or any income paid to another member of your family. However, your income, pensions, maintenance payments, benefits, tax credits and the income of other family members may be taken into account when considering whether you should pay a contribution while you are bankrupt.
Low assets means that you have no single asset worth more than £1,000 and your total assets are not worth more than £10,000. In addition, it means that you must not own or jointly own a house or any other property or land.
3.1.2 How do I apply for my bankruptcy and how much does it cost to apply?
To apply for your bankruptcy you must use the correct form. Debtor application forms are available from money advisers, the Accountant in Bankruptcy and can be downloaded from the AiB website at www.aib.gov.uk. The Accountant in Bankruptcy will be your trustee unless you choose to nominate an insolvency practitioner to act. The insolvency practitioner must consent in writing to your nomination. You should send your completed application form, the evidence that you are eligible to apply and your payment to the Accountant in Bankruptcy. You should also enclose the written consent from your nominated trustee, if any.
It will cost you £100 to apply for your bankruptcy. There are no waivers or exemptions for this fee.
3.1.3 Who pays the costs of administering my bankruptcy?
The costs of administering a bankruptcy will be met first from funds accumulated from the sale of your assets and from contributions that you have made from your income. These include the fees and outlays of the trustee. When the Accountant in Bankruptcy is the trustee, costs that cannot be met by selling your assets or from contributions will be met from the public purse. However, the public purse will not make any payment towards the debts owed to your creditors.
When an insolvency practitioner is the trustee, costs that cannot be met by selling assets or from contributions will be met by the trustee themselves. The insolvency practitioner will consider this before agreeing to act as trustee in your bankruptcy.
Creditors will not normally be asked to cover any of the administration costs other than those incurred in presenting a petition for your bankruptcy to court. Where the sale of assets and income from your contributions produce enough funds to pay all the administration costs, a creditor who petitioned for the bankruptcy may then have their outlay in making the petition reimbursed. Their debt and the debts of other creditors are then considered equally after this.
You should also be aware that you will still be responsible forany solicitors costs that you incur.