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What will happen to my assets?
This is one of the most common questions asked when people are considering bankruptcy and so i have decided to provide a brief guide to the general process that occours. I should make it clear that nearly everything in bankruptcy has many exceptions and for exact advice on your situation you should seek the help of an expert with access to all your details. Secondly i should make it clear that although these are the general rules the Official Receiver has a lot of scope for the interpretation of them and it is their decision and by extension the decision of the court that counts. Sometimes nobody will be able to give an exact answer other than the OR after you have been made bankrupt and therefore a certain amount of uncertainty always exists.Okay now we are done with the disclaimers the first question - is what are classed as assets?
Everything that you own at the date of the bankruptcy is an asset (income is dealt with seperatly). The main rule is that all of your assets will transfer from your ownership to being part of the bankruptcy estate which is controlled by the Official Receiver. This happens on the date of the bankruptcy order and there does not have to be any documented transfer it happens automatically without conveyance.
Now i'm sure that sounds like a disaster but it is not the end of the story just the basic starting point so read on, there are certain exceptions but if the asset is not part of one of the below exceptions then the above applies and the asset remains with the OR forever or until the OR decides to do something with it.
Household goods
The OR will exempt any normal household goods that are needed for you or your family that are not of excessive value. For most people this means everything in the house that they are normally resident in. When we talk about excessive value a good guide ( but not a legally binding one) is anything that would resell second hand at auction for over £1,000 would be considered excessive. If it is needed but considered excessive it will be sold and a reasonable replacement provided. These rules cover all furnishings, white goods, electronic goods, jewelery and anything considered to be a pet. Not included in these rules are anything that you own that is not for your household for example business assets and properties that are rented out.
Tools of trade
The OR will also exempt anything that is an essential tool of trade. The same rules apply re excessive value but that value varies due to the consideration of what is reasonable which may be greater for business assets. What is not included is properties, vehicles(dealt with seperatly) stock and large plant or machinary.
Vehicles
The first thing to note is do you own the vehicle, If the vehicle is on HP, lease or contract hire then you don't. In the case of a lease the OR will look to see if their is any equity in the vehicle, if there is an amount of equity, the equity is treated like it is your car and the same rules below apply. If there is no equity then the OR leaves it to be dealt with by the HP companies who vary in their approach.
Presuming that you do own the car or their is equity in a HP agreement then the next consideration is do you need it and i mean need rather than it is a convenience. The OR can choose to exempt the car if it is needed for one of two reasons
- 1) You need it to get to work or for use whilst at work, Some OR's also extend this (although it is not stated in law) to people who are actively seeking work and are likely to need the vehicle when they do get a job.
2) You need it for your basic domestic need, again i mean Your basic domestic need, not the need of your partner, or other family member. Typically as this is for people not working you would probably need to show that you had an illness or disability that stopped you from using public transport (or there was no reasonable public transport). An exception is made for people who receive carers allowance for looking after someone else.
excessive value - If you need the vehicle but it is deemed to be of excessive value then the OR can take and sell the vehicle and give you back a cheaper vehicle (or money to buy one) usually you are looing at around £2,000 for this but the OR can grant more or less depending on your needs. - The OR can also let you or a family member pay the difference to keep the original car.
Vehicle not needed - If following the above the OR decides you dont need it then the OR will dispose of the vehicle. This can be at auction, it could be scrapped or the OR can let you buy it back (or a family member)
Property
Coming soon - this is a big topic
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