When you are bankrupted but have assets available to enable you to pay off, or in some cases offer security, you may be able to reverse the bankruptcy so that it is as if you were never bankrupted. This is called annulling the bankruptcy.
If I wish to annul my bankruptcy, how long do I have?
If you decide to annul, you can in theory do this at your leisure, however a number of recent cases have shown that you must act promptly as costs can increase exponentially.
In Re Ruiz (a bankrupt) [2011] EWHC 913 the husband made himself bankrupt with assets (at the time of bankruptcy) of over £300,000 and debt of £66,000. However due to the failure to annul the bankruptcy quickly (over 3 years had elapsed), the Trustees in Bankruptcy’s costs became very significant, whilst the value of the assets, in this case, a house, tumbled.
To demonstrate the risk, the funds required in Re Ruiz to annul the bankruptcy increased over the three years as follows:-
– April 2008, £117,000;
– November 2008, £132,000;
– October 2009, £203,000; and
– March 2011, £260,000.
The final annulment in 2011 broke down as follows;-
– Debts due to creditors (including interest) £113,000;
– Whilst Trustee’s fees £38,100 (Excluding VAT); and
– Legal fees and disbursements £46,700 (Excluding VAT).
One of the points that this case demonstrates graphically is that one must apply to annul the bankruptcy early. The fees of a Trustee in Bankruptcy can be challenged, but that requires further costs, which can be avoided by a speedy annulment application following the bankruptcy order.
Chris Tuckett, Solicitor – 11 July 2012