What Percentage Of Bankruptcies Are Denied

What percentage of bankruptcies are denied

This page was last updated in July 2022. 

What Percentage Of Bankruptcies are Denied in 2022

Explaining Bankruptcy

What is bankruptcy?

Bankruptcy is a legal procedure that must be authorized or denied by a court in the United Kingdom. Becoming bankrupt allows people or businesses to restructure or eliminate their debt. This includes debt that is due and owing, such as credit card debts, medical bills, personal loans, and business loans. It can also include secured debt, such as a mortgage or car loan.

To file for bankruptcy, a general fee must be paid. 

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What happens if someone is made bankrupt?

If you go bankrupt, certain restrictions are placed on you and your property. These restrictions will be lifted after a set period of time, typically three years. During this time, you will not be able to obtain credit of more than £500 without disclosing your bankruptcy status. You will also be required to pay contributions from your income towards your debts. This may be served through an income payment order. To go bankrupt has a detrimental effect on your credit file and so it is often recommended to seek a better alternative and avoid bankruptcy. 

Bankruptcy affects self-employed people differently. The main difference is that a self-employed person’s business assets may also be seized. 

If your application is successful, you will be assigned a personal case officer from a registered charity that can help you. 

Does a bankruptcy affect your pension fund?

If you are declared bankrupt, your pension fund may be affected. The trustee in bankruptcy will usually take control of any private pensions that you have. This means that they can use the money in your pension to pay off your creditors. If you have a workplace pension, the rules are different. Your workplace pension cannot be used to repay your debts, but the trustee in bankruptcy may still take control of it. This could affect how much money you have to live on in retirement. 

Why would someone file for bankruptcy?

A person or company may file for bankruptcy because they do not have enough money to pay their debts. These debts may include credit card debts, rent arrears. This might be caused by a range of factors, such as job loss if circumstances change suddenly due to unexpected expenditures, and poor financial management where someone can barely afford living expenses. 

If you are considering bankruptcy, it’s important to be aware of the data protection regulations that apply. These regulations protect your personal data from being used inappropriately. During a bankruptcy procedure, your personal data can only be used for the purpose of collecting the debt. 

What are the requirements to apply for bankruptcy in the UK?

To go bankrupt in the UK, you must be insolvent, which means you can’t afford to pay debts. You must also have a minimum amount of £5,000 in debt, although this limit may be higher if you own a home. You must also not have filed for bankruptcy within the last five years.

It is also possible to go bankrupt through a ‘no-asset’ procedure by filling an online form. This is for individuals going bankrupt with no assets. 

What is a bankruptcy petition?

This is a legal process that allows debtors to have their debt discharged. A debtor may file a petition if they are unable to pay their debt.

Can a bankruptcy petition be denied?

A petition may be denied for a number of reasons. If your bankruptcy petition is denied, you will still be liable for your debt and restrictions will continue to apply to you. 

It’s critical to get expert assistance and debt advice before filing your own bankruptcy petition. It can also be useful to consult a debt counsellor. 

What happens once you file bankruptcy?

Filing bankruptcy triggers an automatic stay. This means that your creditors who you owe money to will be unable to contact you or take any legal action against you until the court rules on your request.

The first step in the bankruptcy process is to attend a bankruptcy hearing where an Official Receiver. The Official Receiver is someone who works on behalf of the Insolvency Service.  

going bankrupt with no assets

The Insolvency Service

The Insolvency Service is a government body that provides information and advice on insolvency, bankruptcy, and financial difficulties. 

What is an Insolvency Practitioner?

An insolvency practitioner, known as an Official Receiver is a professional who deals with bankruptcy and insolvency cases. The Official Receiver is usually appointed by a court to oversee the bankrupt’s estate and to ensure that creditors are paid until a person becomes bankrupt clear.

The role of an Official Receiver is to manage the bankruptcy estate of a person made bankrupt. An Official Receiver may also be involved in negotiating alternative repayment arrangements, such as debt management plans.

"If you go bankrupt, certain restrictions are placed on you and your property. These restrictions will be lifted after a set period of time, typically three years. During this time, you will not be able to obtain credit of more than £500 without disclosing your bankruptcy status."

Your responsibilities when a bankruptcy order is made

When you file a bankruptcy order, you are expected to adhere to a number of rules and regulations. These include attending mandatory counselling sessions, disclosing al relevant information and providing required documentation such as financial records. 

The rules you are required to follow upon filing for bankruptcy are:

  • You must attend two mandatory counselling sessions.
  • You must provide your trustee with required documentation, including a list of your assets.
  • You must make all required payments to your trustee.
  • You must obey any court order.

If you fail to follow these rules, your bankruptcy may be denied. In addition, you may be subject to criminal charges or court fines.

becoming bankrupt

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Percentages of Bankruptcies Filed and Denied in the UK

How many bankruptcies are filed each year in the UK?

There were 22,653 personal bankruptcies in England and Wales in 2018. This is down from 24,453 in 2017 and 30,822 in 2016.

How many bankruptcies are denied each year in the UK?

Bankruptcy cases are typically rejected if the applicant does not meet the requirements, such as not being insolvent or not having enough debt. In 2018, 4,632 bankruptcies were rejected, which is down from 5,315 in 2017 and 6,067 in 2016.

What percentage of bankruptcies are denied in the UK?

In 2018, the insolvency office rejected 20.4% of bankruptcy applications. This is down from 21.7% in 2017 and 19.6% in 2016.

Why has the number of bankruptcies and bankruptcies denied decreased in recent years?

The decrease in bankruptcies and bankruptcies denied may be due to the introduction of cheaper alternative debt solutions, such as a debt relief order (DROs) and individual voluntary arrangements (IVAs). These options may be less expensive and less damaging to one’s credit rating than to go bankrupt.

denying bankruptcy

What is the likelihood of having your bankruptcy application denied?

The UK’s Insolvency Service administers bankruptcy proceedings, and the fact is that only a small proportion of bankruptcy applications are rejected.

As little as one percent of applications for bankruptcy are rejected in the by the Insolvency Service each year, according to reports. This is because bankruptcy eligibility is considered to be quite permissive, and since it is only usually employed as a last financial option when individuals have exhausted all other options for avoiding insolvency.

Factors that can increase chances of bankruptcy denial

There are a number of factors that can increase your chances of having your bankruptcy denied. These include:

Fraud

If you are accused of committing fraud, such as hiding assets or lying on your bankruptcy form and application. You are required to disclose any joint accounts you have such as a joint bank account with a family member. 

Failure to attend mandatory meetings: If you fail to attend required meetings, such as the meeting of creditors, or if you fail to comply with the requirements of your bankruptcy case.

Sufficient funds to pay debts

If the court decides the debtor has enough funds to pay their debt. In this scenario, the debtor may be forced to participate in a repayment program instead of having their obligations discontinued.

Sufficient assets to pay debts

 If the debtor has substantial assets which can be used to pay their debt. In this scenario, the debtor may not be able to keep their assets and could possibly have to sell them in order to pay creditors.

No sincere effort made: If the court feels that the debtor has not made a sincere effort to repay their debt. This could be because they have hidden assets or income, or because they have been living extravagantly while claiming to be unable to repay certain debts.

bankruptcy not given

What are the most commons reasons for bankruptcy denials in the UK

Insufficient evidence of financial hardship:

To be eligible for bankruptcy in the UK, you must be able to demonstrate that you are unable to pay money owed. If you are unable to provide sufficient evidence of financial hardship, your bankruptcy application may be denied.

Improper use of bankruptcy:

Bankruptcy is intended for those who are unable to repay their debt and have no other means of doing so. If it is found that you have deliberately used bankruptcy to avoid repaying your debt, your application may be denied.

Failure to complete mandatory counselling:

Before filing for bankruptcy in the UK, you must complete mandatory counselling with an authorised provider. This is to ensure that you have explored all other options and understand the implications of bankruptcy. 

Assets above the exemption limit:

When you file for bankruptcy in the UK, your assets will be frozen and used to repay your debt. However, there are certain exemptions that allow you to keep certain assets, such as your home or car. If your assets are valued at more than the exemption limit, your bankruptcy application may be denied.

Income above the threshold:

If your income is above a certain threshold, you may not be eligible for bankruptcy. This is because it is assumed that you have the means to repay your debts. If your income is above the threshold, your bankruptcy application may be denied.

reasons not to get bankruptcy

You have been bankrupt before:

If you have been declared bankrupt before, you may not be eligible for bankruptcy again. This is because it is assumed that you have already had the opportunity to repay your debts and have not been able to do so. If you have been bankrupt before, your bankruptcy application may be denied.

If you are considering filing for bankruptcy in the UK, it is important to seek professional advice from an experienced bankruptcy attorney who can assess your individual situation and advise you on the best course of action.

How Can I Avoid Having My Bankruptcy Denied?

  1. Make sure you disclose all of your assets, bank accounts, joint account, income – including surplus income. If the court feels you are hiding something, they may deny your bankruptcy.
  2.  
  1. Be upfront about your financial situation. If the court believes you are not being truthful, it might refuse your bankruptcy application.
  2. Follow the requirements of the bankruptcy process. This includes attending mandatory credit counselling sessions and providing required documentation.
  3. Seek professional advice. An experienced bankruptcy attorney will be able to assess your individual situation and advise you on the best course of action.

When a Bankruptcy is Denied

What are the consequences of being denied bankruptcy?

If your bankruptcy is denied, you will still be liable for your debts. 

The consequences of bankruptcy include the loss of your assets, and  because the denial of your bankruptcy will appear on your credit report for up to years, it will make it difficult to obtain new lines of credit. However, you can still rebuild your credit by making on-time payments and maintaining a good credit history.

Explaining Bankruptcy

What can I do if my bankruptcy is denied?

If your bankruptcy is denied, you may be able to reach an alternative agreement with your creditors. You can work with a debt management company to help. 

It’s critical to get expert assistance before taking any action in bankruptcy. An experienced bankruptcy attorney will be able to evaluate your unique circumstances and advise you on the best course of action.

Can I Appeal If My Bankruptcy Application Is Denied?

If your bankruptcy application is denied, you can appeal the decision within 21 days.

You will then be given a hearing date, at which you can present your case to a judge.

If the judge decides in your favour, your bankruptcy application will be accepted. If the judge denies your appeal, you will still be liable for your debts and restrictions will continue to apply to you.

What Are My Other Options if Bankruptcy is Denied?

Debt consolidation

This involves taking out a new loan to repay your outstanding debts. This can be a good option if you have a good credit score and income level.

Debt settlement

This involves negotiating to agree on a reduced amount of debt that you will repay. This option can be difficult to achieve on your own and it is important to seek professional advice before proceeding.

Debt management

This involves working with a credit counselling agency or finance company to create a plan to make monthly payments to repay your debts. 

Personal loan

You may be able to take out a personal loan to repay your debts. This can be a good option if you have a good credit score and income level.

It’s important to seek professional advice if you are considering filing for bankruptcy. An experienced bankruptcy attorney will be able to assess your individual situation and advise you on the best course of action.

Reasons not to get bankruptcy

Although bankruptcy can provide some relief from your debts, there are also a number of reasons why it may not be the best option for you.

Some of the reasons why bankruptcy may not be the best option for you include:

– The impact on your credit rating: Bankruptcy will stay on your credit file for six years and will make it difficult to get credit in the future.

– The cost: There is a fee for applying for bankruptcy, which must be paid upfront.

– The effect on your assets: You may have to sell your home or other assets to pay off your debts.

– The effect on your employment: You may be unable to work in certain professions if you are declared bankrupt.

You should also be aware that certain debts cannot be included in a bankruptcy order. For example, student loans, child support payments and court fines cannot be included.

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Article author

Katy Davies

I am a keen reader and writer and have been helping to write and produce the legal content for the site since the launch.   I studied for a law degree at Manchester University and I use that theoretical experience, as well as my practical experience as a solicitor, to help produce legal content which I hope you find helpful.

Outside of work, I love the snow and am a keen snowboarder.  Most winters you will see me trying to get away for long weekends to the slopes in Switzerland or France.

Email – katy@helpandadvice.co.uk

Frequently Asked Questions

What is a bankruptcy petition?

This is a legal process that allows debtors to have their debt discharged. A debtor may file a petition if they are unable to pay their debt.

The Insolvency Service

The Insolvency Service is a government body that provides information and advice on insolvency, bankruptcy, and financial difficulties. 

How many bankruptcies are filed each year in the UK?

There were 22,653 personal bankruptcies in England and Wales in 2018. This is down from 24,453 in 2017 and 30,822 in 2016.

What percentage of bankruptcies are denied in the UK?

In 2018, the insolvency office rejected 20.4% of bankruptcy applications. This is down from 21.7% in 2017 and 19.6% in 2016.

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