The consequences of bankruptcy are serious. Your assets, including your interest in your home, will be transferred to your trustee in bankruptcy. This will not be ‘undone’ when you are discharged. However, if your bankruptcy is annulled, it will be treated as if it had never happened and your assets will be restored to you.
When can a bankruptcy be annulled?
There are 3 grounds on which a bankruptcy can be annulled:
- The bankruptcy order should not have been made. This means being able to show that at the time the bankruptcy order was made the debt on which it was based did not exist or that it was not enforceable.
- The bankruptcy debts and expenses of the bankruptcy have all been paid or security has been given for them to the satisfaction of the court. This does not mean just the debt in the bankruptcy petition but all of your debts. You will also have to pay the costs of the Official Receiver and of the trustee in bankruptcy if one has been appointed.
- That you have entered into an Individual Voluntary Arrangement since the bankruptcy order was made.
How to obtain an annulment
You have to apply to the court:
- You must issue an application
- You must file a witness statement with the correct information and evidence
- You must pay the court fee of £155.00.
The court will set a date for the hearing. The application and witness statement must be served on the Official Receiver and on the trustee in bankruptcy if one has been appointed. It must also be served on the petition creditor if the application is on the basis that the bankruptcy order should not have been made. These documents must have been correctly served at least 14 days before the hearing.
Not less the 21 days before the hearing date the Official Receiver and the trustee in bankruptcy must send a report to the court setting out the circumstances leading up to the bankruptcy, details of the bankrupt’s assets and creditors and what arrangements have been made for paying off or giving security for the debts.
If, at the hearing, the court is satisfied that one of the grounds for annulment has been proved, the bankruptcy will be annulled.
If the bankruptcy is annulled, forms (K11) should be filed with the Land Charges Registry to remove the bankruptcy entries on the register.
Taking legal advice
The annulment of a bankruptcy could be of critical importance in retaining your home or other assets. It is important to get the application right and that means dealing correctly with the Official Receiver and trustee in bankruptcy and presenting the case properly to the court. Taking advice from solicitors or an insolvency practitioner is always desirable and often necessary when the annulment of a bankruptcy is required.
For more information proceed to Discharge from bankruptcy