People say filing for bankruptcy is a bad thing. But it’s actually a chance to start your financial life over again. Filing for bankruptcy can remove financial hardships due to job loss, recession, or wrong financial moves. Filing for bankruptcy isn’t rocket science. However, in Jacob’s scenario, he needs expert advice to get out of this mess.
Can you file for bankruptcy in the UK?
If you live in the US, you can still file for bankruptcy in the UK if:
- You lived in the UK for a minimum of three years prior to applying for bankruptcy; or
- You’ve operated a business in the UK for more than three years before applying for bankruptcy.
During this time, you need someone who can file and handle the case on your behalf. Bankruptcy can discharge most of your debts. But remember, bankruptcy can’t discharge student loans. Once you file for bankruptcy in the UK, an ‘Adjudicator’ who works for the Insolvency Service will review your application and inform you of the decision within 28 days of receiving your application.
The Adjudicator can refuse your bankruptcy application by providing you with a ‘Notice of Refusal.’ This notice will inform you of the reasons for the rejection. You may then request a review within 14 days by providing valid reasons for your review request. Unfortunately, you can’t add new information to review. The Adjudicator will send another notice of a final decision. For a refusal, you can appeal to the bankruptcy court within 28 days. If all goes well, the Adjudicator will approve your application and give you their approval to file for bankruptcy.
What happens if you file for bankruptcy in the UK?
If the Adjudicator allows you to file, you’ll receive a copy of the bankruptcy order. You have to pass an interview regarding your current financial situation. The bankruptcy court will use your assets to pay off debts. You are expected to follow the bankruptcy restrictions. The Insolvency Service will add your name and other details in the Individual Insolvency Register.
What happens to the outstanding debts?
Filing bankruptcy will discharge your debts and remove other restrictions after 12 months. Anyone with internet access can view your details through a public bankruptcy register, including your creditors. Even your creditors will know everything about your bankruptcy filing.
After filing for bankruptcy in the UK, you may need to apply to a local court. Most European and other countries, such as the US, recognise bankruptcies if they agree with the UK bankruptcy laws through international agreements and cooperate with each other’s Insolvency Services. Most European and other countries have made international agreements. If your home country does not agree with the UK’s bankruptcy laws, your creditors may ask for repayment. They can use your assets to recover outstanding debts and even sell the debts to third-party collection agencies.
You might be able to include Student loans taken before 1 September 2004 in your bankruptcy. It would be best if you first discuss this matter with your Trustee who may suggest you stop making payments to the company. If your income level is less than the income threshold for student loans, you’re not required to pay anything. For example, for loans starting after September 2012, the threshold is £21,000 per year. If you find yourself above the threshold, you will have to pay 9% of your income.
How does bankruptcy affect your spouse or partner?
Filing for bankruptcy does not cause your outstanding debts to impact your spouse or partner. Outstanding debts only affect your joint assets or anything your spouse co-signed. You have to report all the details to the Official Receiver (OR), who will handle your bankruptcy, and arrange your payments. The OR will review yours and your spouse’s income and expenses. This way, the OR can determine the percentage of the household bills you should be paying and the amount of disposable income you have to pay off debts.
Your partner’s credit rating will stay intact if you file for bankruptcy. Without a financial link, your bankruptcy can not harm his/her credit. Your credit rating is personal. If you file for bankruptcy, this will not stop your spouse from buying a new house. However, your spouse must do so in his/her name without making you a joint owner.
Will filing bankruptcy affect your immigration status?
Can you get a green card after filing for bankruptcy in the UK? To my knowledge, you won’t face any issues. However, it’s best to seek advice from someone who handles immigration in the US. Immigration laws change over time. You should ask an immigration attorney about this.
Author: Lyle David Solomon
DISCLAIMER: This article should not be regarded as constituting legal advice in relation to particular circumstances. It is merely a general comment on the relevant topic. If specific advice is required in connection with any of the matters covered in this article, please speak to Oak View Law Group directly.