Important information about MAP bankruptcy
You need to know how bankruptcy could affect your home and job.
The AIB will look at how you have managed your finances. They will look at what you can pay towards your debts. This is based on the budget we helped you put together. They will also look at what you and your family need for essential spending.
They will not just look at your situation now. They may also look back over the last five years. You need to be open and honest with the trustee.
Conditions of MAP bankruptcy
There are some restrictions during MAP bankruptcy. These are things you cannot do.
These are:
- If you apply to borrow more than £2,000, you must tell the lender you are bankrupt. This is also the case for joint loans
- You cannot borrow any amount if you have taken out £1,000 or more of debt without telling the lender you are bankrupt. This is also the case for joint loans
- You cannot set up a limited company or act as a company director
- You must not hide assets (items of value)
- You must work with the trustee. You cannot refuse
- You cannot act as a member of the Scottish Parliament, any local council or a school board
- You cannot act as a Justice of the Peace
If any of these are not followed your bankruptcy might be extended. In rare cases, you could be prosecuted. This could result in a fine and/or prison.
If you have power of attorney for someone: you need to ask your trustee if this will be affected.
Your MAP bankruptcy conditions can be extended
You might be at risk of your bankruptcy conditions lasting up to 15 years. This can happen if you:
- Do not work with the trustee during your bankruptcy
- Took out debts before going bankrupt that you knew you could not pay back
- Have debts from gambling or fraud
- Ran a business dishonestly
- Have given away or sold any goods for less than their value
- Paid some creditors but not others, on purpose. This includes loans from family and friends
The trustee can extend your bankruptcy conditions if they decide you have done any of these. This is called a ‘bankruptcy restriction order’.
To add restrictions for five years or more, the trustee must formally apply to the Sheriff Court.
Your bankruptcy will be kept on a public register
Your bankruptcy will be put on the ‘Register of Insolvencies’ for at least two years.
Speak to us if you think you would be put at risk if your name and address were to appear on the register.
What happens if my financial situation gets better?
You do not have to pay your debts as part of a bankruptcy.
However, you will need to speak to the AIB if your finances get better within six months of going bankrupt.
They will review your budget to see if you have any money left after your essential living costs are paid.
If you do, you will have to pay all your available money to them. Although any increase in money from benefits is ignored.
This is paid through a ‘debtor contribution order’. This will run for four years after your bankruptcy award date.
If you get a lump sum of money after your bankruptcy has been awarded, this can be claimed by the trustee. This could be an inheritance, personal injury compensation or refunded payment protection insurance (PPI). This applies for four years after your bankruptcy award date.
MAP bankruptcy and your assets
To be eligible for MAP bankruptcy:
- Your car is worth £3000 or less
- Your other assets are worth less than £2000 in total
- No single item is worth more than £1000
That means you will be able to keep all of your items of value and the trustee will not sell them.
The trustee will try to get goods or money back if you have:
- Given away or sold any goods for less than their value
- Deliberately made payments to some creditors but not others. This includes loans from family and friends
MAP bankruptcy and your job
There are some jobs you cannot have when you are bankrupt. This is often because you are in control of other people's money. These are jobs like solicitors and many roles in financial services.
Before you apply, you should find out if there are any risks to your role by:
- Checking the terms and conditions of your contract
- Speaking to your employer, trade union or professional body
Spending more than your income
You will need to think about how you cover the gap between your income and spending moving forward.
Your ability to get credit will change during bankruptcy. You will have to find another way to pay for essential costs.
Check out our guide here.
MAP bankruptcy and your bank account
It is a good idea to open a ‘basic’ bank account for your usual banking. You should do this before going bankrupt.
You may be able to stay with your current bank. If not, you can apply for a ‘basic’ account with another bank.
Your account can be frozen at any time after your bankruptcy is agreed. This means you will not be able to use it.
If it is frozen for more than a week, you can contact the AIB and ask them for a letter to the bank to request the account be unfrozen.
The bank may then decide to close your account. This is more likely if you owe them money.
If this happens, you may need to ask a different bank for a ‘basic’ account.
Find out more about basic bank accounts by visiting www.stepchange.org/map-bba
MAP bankruptcy and credit agreements
Ongoing credit agreements may be cancelled if you go bankrupt.
This may be the way you pay your home and car insurance, or mobile phone contract.
To avoid losing such goods or services, you should speak to your provider. You may be able to pay for the policy or contract in full.
You will also need to tell anyone else named on the agreement or policy that you are going bankrupt.