Bankruptcy And Your Assets
The Trustee must be informed of all assets. It is their decision as to what you can keep.
The Trustee takes control of all assets not exempt from bankruptcy. They will arrange for their sale, using the proceeds to pay the fees, costs and expenses of the bankruptcy, before paying the creditors.
Normally, the sale of any asset should be expected to raise at least £500 towards the bankruptcy for it to be worthwhile for the Trustee to claim it.
When the bankruptcy order is made, your bank and savings accounts are seized by the Trustee. If in credit, the balance is an asset in the bankruptcy.
Items Excluded From Bankruptcy
It is only reasonable that you be allowed to keep essential items and are not impeded from earning a living.
- Household items essential for basic domestic needs – clothes, furniture, TV etc.
- A modest vehicle depending on circumstances (see Bankruptcy & Your Car)
- A residential tenancy.
- Items needed for trade or employment, such as tools and computing equipment.
- Money held in pension funds (see Bankruptcy & Your Pension)
- Money obtained from a student loan, if a balance of the loan remains payable.
For information about property see – Bankruptcy & Your Home.
Disposing Of Your Assets Before Bankruptcy
If Bankruptcy is looming and unavoidable, you may consider taking personal responsibility for the sale of any assets that would otherwise be sold by the Trustee, such as your car. The Trustee could put the items for sale at public action with the intention of getting a reasonable price in the quickest time.
You may be able to raise more money by selling assets by other means. This may prevent the bankruptcy if you can raise enough money to repay what is owed or agree a settlement.
You should take care to avoid selling or giving away your belongings as less than their true value. This is called making “transactions at an undervalue”. This is not allowed and may result in a Bankruptcy Restriction Order.
What assets could be sold?
If the Trustee determines that an asset is worth more than “reasonable replacement value” it may be sold with an allowance given to buy a cheaper alternative. The balance of money raised (less funds required for a replacement) will form part of the bankruptcy estate.
Assets Obtained Or Received During Bankruptcy
Any assets or monies obtained from any source whilst you are bankrupt (i.e. before discharge) may be claimed as part of the Bankrupt’s estate by the Trustee.
- Anything bequest in a will, for example a property.
- Something of little value at the time of the bankruptcy order, but rising in value before bankruptcy discharge.
- Claims made against another person through court proceedings.
- Any other windfall.