Minimal Asset Process (MAP)

Yes, however, depending on the line of work you are in then bankruptcy may affect your ability to trade.

For example, if you require goods on credit of over £2,000 you need to advise the supplier of your bankruptcy. You must also tell anyone that you do business with the name of your business when you went bankrupt. Please contact us for further advice.

No, your application is sent to and dealt with by the AiB without involving the court.

However, bankruptcy is a court process and your Trustee, you and your creditors can revert to the court throughout the period of sequestration should the need arise, for whatever reason.

If you are a homeowner and thinking about applying for Sequestration & Bankruptcy, the level of equity in your property is calculated and the Trustee will release that amount for the benefit of the creditors. However, you can apply for Sequestration if you are a homeowner, or are privately renting, or even have no fixed abode. Depending on your debt level and ability to repay, you may qualify for the different Minimal Asset Process route to Sequestration.

It is possible to keep your home when entering Sequestration, though unlikely if your property has significant equity.

If the property has negative or no equity, the trustee may request a nominal sum to relinquish their interest in the home. This payment would normally be charged at £550 as per the Accountant in Bankruptcy Sequestration guidelines.

If you are a homeowner and wish to apply for Bankruptcy, we would always recommend talking to an experienced debt adviser who can talk you through the Sequestration process and alternative formal Scottish debt solutions such as Protected Trust Deeds and the Debt Arrangement Scheme.

Do I need to make any payments to my unsecured creditors if I am bankrupt?

No. We will calculate your surplus income and this payment will be made to your bankruptcy, you will no longer make payments to any of your unsecured creditors from the date your bankruptcy is awarded.

There is no fee payable by you for our advice prior to your bankruptcy.

However, depending on your route into bankruptcy, there may be application fee of £150 for Full Administration Sequestration. if you are in receipt of certain prescribed social security benefits (e.g. Universal Credits, Child or Working Tax Credits) or you are assessed as having no surplus income then there is no application fee payable.

The Minimal Asset Process route to Sequestration has no fees at all.

Sequestration fees are payable to the Accountant in Bankruptcy (AiB) prior to them granting your application.

Contact us for further information on how much the fees, if any, are likely to be for you.

No, this type of check contains only criminal history information. Bankruptcy is a civil court process. However, a prospective employer could also carry out a financial credit check which may make them aware of your bankruptcy.

The Accountant in Bankruptcy will normally be able to process your application within 10 working days.

Your application will only be processed if you have provided all the necessary information and paid your application fee of £150 for the full administration route to sequestration, or £90 for the minimal asset process route to sequestration. If you are in receipt of certain prescribed social security benefits then there is no application fee payable.

In bankruptcy, do I need to inform you if I have a change in circumstances, e.g, salary increase?

Yes. We will write to you every 6 months for an update on your financial situation, however, if you have a change within this period you need to inform us.

In general, no, however you should discuss the existence of your pension and you will be advised accordingly concerning the availability of a tax free lump sum and the contributions you make to the pension.

You will be required to inform your Trustee of any redundancy and severance payments.

If you were unable to maintain the contribution, your Trustee would suspend payments until you returned to employment. On your return, your financial position would be reviewed and an appropriate contribution would be set. If you failed to return to employment, then it is likely no further payments would be required and your Trustee would process his discharge at the next available opportunity, provided all assets have been realised.

Your contribution would be suspended if you were unable to maintain payment due to ill health.

You would be required to contact Harper McDermott to discuss your situation and then maintain contact until you returned to work. On your return, you would recommence payment of your contribution at an affordable level.

In Bankruptcy, what happens if I have minimal or negative equity in my home?

If there is negative or minimal equity then the Trustee would request a third party pay the sum of £550 to relinquish his interest in the property.

If your property is owned partly by a housing association or other organisation then any equity will be calculated taking into account of the shared ownership agreement.

If you have to pay rent for their share you would continue to do as an essential expenditure.

In bankruptcy, what happens to the interest, fees and charges on my debts?

All interest, fees and charges will be frozen at the date of your bankruptcy.

In Bankruptcy, what will happen to my endowment policy? If you have an endowment policy that is not assigned to your mortgage lender, then it may have to be surrendered for the benefit of your creditors.

Alternatively, a third party could pay the equivalent of the policy’s surrender value and/or you could extend your payment period, therefore, allowing you to keep the policy. You will be given an allowance to maintain the monthly premium to the policy in your Sequestration expenditure.

Your Trustee will note his interest in your policy to allow creditors to benefit in the event that the policy was to pay out.

You will be given an allowance to maintain the monthly premium to the policy in your Sequestration expenditure.

Some banks do not allow you to hold an account with them if you are bankrupt.

If you have an overdraft or other debt with your bank then you will definitely need to change banks and arrange for your salary/wages to be paid into the new account.

You should also transfer your essential direct debits to the new account prior to your bankruptcy, making sure not to transfer direct debits to the unsecured creditors.

In bankruptcy, will my name be published in a local newspaper?

No. Your name and address will be published on the Register of Insolvencies and possibly in the Edinburgh Gazette (there is no legal requirement to advertise in the Gazette but subject to your circumstances your Trustee may choose to do so).

This would be dependent on the level of equity. Equity can be realised using the following methods:

• 3^rd party making payments e.g. family, friend, business associate etc
• Extending the payment period
• Re-mortgage or secured loan
• Mortgage to Rent Scheme
• Sale by private bargain or public sale

Bankruptcy does not include the following:

• student loans
• any order imposed by any court
• any liability due to fraud including benefit overpayments
• any obligation to pay ongoing aliment
• mortgage/secured loan or any other debt secured on an asset e.g. hire purchase on a vehicle
• debts taken out after being declared bankrupt

If you inherit monies or assets up to 4 years from the date of bankruptcy then they will form part of your bankruptcy and will be passed to your Trustee for the benefit of your creditors.

Your creditors will be notified of your Sequestration/Bankruptcy and should deal directly with the organisation handling your Bankruptcy.

If any of the people who owed money continue to contact you while you are in your bankruptcy, or even after it has ended; you should advise them that you have been made bankrupt and offer the Insolvency Practitioner’s contact details.

If you are a customer of Trust Deed Scotland and Harper McDermott and the creditor does not accept this explanation then please let us know and we will contact the creditors on your behalf.

It is possible that being made bankrupt could affect your existing employment and prospects for future employment.

If you are in any doubt then you should review your employment contract and/or speak confidentially to your HR department. If you are working in the financial services industry, police, armed forces, prison service, licensed HGV driver, Chartered Accountant or are a member of any recognised professional body then you should take further advice, this will be discussed by your adviser prior to you making an application for bankruptcy.

This list of affected jobs/careers is not exhaustive.

You will need to review the terms of your lease and with your Trustee’s help you may have to enter into negotiations with your landlord to retain the premises.

The decision will depend on your payment history, existing arrears, type of premises, type of business, likelihood of landlord finding a replacement tenant, period of lease etc. Please contact us for further advice.

Not necessarily but it is possible. If you are a home owner, the level of equity (difference between the value of your property and any loans secured on it) is calculated once you are made bankrupt.

The Trustee would then need to realise the equity for the benefit of your creditors, if the equity is high in value then a sale may be the only option.

Yes, if it is affordable. You will be asked to show proof of your income either by providing bank statements, future cashflow projections, your most recent set of accounts and/or information provided by your accountant.

You will then be asked to make an affordable contribution based on your income and expenditure.

We would not contact your employer unless we required specific information from them, normally in circumstances where you have failed to comply with any of our requests and/or if you have missed any of your agreed payments.

If you have missed payments then your Trustee may instruct your employer to deduct your payment directly from your salary via an Income Payment Order granted by the court.

The only other way your employer could find out about your sequestration is via the ROI (or the Edinburgh Gazette, should your case be advertised).

Yes, you must keep up to date with your tax returns and pay all taxes due from the date you are made bankrupt.

A Statutory Moratorium in Scotland is designed to give you short term protection from your creditors (the people you owe money to).

If you are finding it difficult to repay one or more of your creditors and feel like you need breathing space to consider your options without the threat of creditor action, you can apply for a Statutory Moratorium. This effectively stops creditor action against you for 6 weeks, offering you valuable time to seek advice and think about your longer term options.

The Statutory Moratorium is not a debt solution, it doesn’t write off debt and does not stop interest and charges from building up, but it does give you time to think and will stop imminent creditor action, such as an earnings arrestment or a bankruptcy petition. Any debt recovery actions already in existence, e.g. an earnings arrestment, will remain in place.

There are no fees to pay for applying for a Statutory Moratorium and the application process is very simple.

If the Statutory Moratorium application is successful, your creditor(s) will not be able to serve a charge for payment during the six-week period or enforce any court orders. You are allowed to apply for a moratorium once in any 12-month period so if you’ve already applied during the last year, you won’t be eligible.