Just because you have a bankruptcy petition doesn’t mean it’s the end of it all. In selected cases, there is a possibility to get the bankruptcy order annulled and restore the credit file. Here’s a quick overview of facts related to annulment of bankruptcy order and costs related to it.
Cases when bankruptcy order can be annulled
There are three possible grounds, under which it is possible to get the bankruptcy order annulled-
- The bankruptcy order shouldn’t have been made
- The debts related to bankruptcy have been paid in full, including interest
- One has already proposed individual voluntary arrangement successfully, the same has been accepted by creditors.
Note that the bankruptcy order can be annulled only before discharge from bankruptcy. If that doesn’t happen, the bankruptcy order will be a part of the credit file of the person for next six years. In case one has petitioned for the same, it is not possible to use ‘change of mind’ as a ground.
Annulling the bankruptcy order when it shouldn’t have been made
There are many situations where the bankruptcy order can be annulled, especially when it shouldn’t have been made. These include situations like
- Error in court process related to one’s bankruptcy.
- bankruptcy petition debt wasn’t due.
- The bankruptcy petition debt was used for avoid process to pursue debt
- The person was under age of 18.
It is always better to consult an insolvency solicitor to understand if one has a good case and how to move ahead with further course of action. An informal stay on the proceedings can be asked for, and if refused, one can apply for formal stay. Getting the bankruptcy order annulled involves legal costs of about £5,000 – £10,000, of which some amount can be recovered from petitioning creditor if you are successful with the application.
Annulment where debts are paid in full
In case you don’t have liquid cash to pay debts or have assets that exceeds the debt, you can be declared bankrupt too. In such cases, it is best to sell an asset (if available) to repay the debt at the earliest, as one can save costs of annulment. The official receiver, again, in such cases should be contacted at an early stage, after which you can apply for a stay on proceedings. The costs, if the proceedings have been initiated, can be even higher, as you have to pay for cost of official receiver, petitioning creditor, and the debt due with interest.
Annulment in case of individual voluntary arrangement
It is possible to propose for individual voluntary arrangement, when the person has enough income or resources to pay a monthly contribution for the debts. The order will be annulled and the assets will be protected from bankruptcy order. To send the proposals to creditors, you will required help of a licensed insolvency practitioner. If about 75% of voting creditors accept the proposal, the order can be annulled.
Contact business rescue experts to know more on the process and take the initial steps as early as possible to tackle the bankruptcy situation better.