Q&A
1. What is bankruptcy annulment?
Bankruptcy annulment is a way of cancelling a bankruptcy, at the discretion of the court using grounds specified in the Insolvency Act 1986. It can only be used in limited circumstances and you should always seek specialist advice before considering your options.
2. Where can I go for help and advice?
Citizens Advice
For advice and information on debt and other topics, visit your nearest Citizens Advice Bureau – check the phone book for the address.
National Debtline
If you live in England, Wales or Scotland phone 0808 808 4000 or visit the National Debtline website for debt advice and information.
Consumer Credit Counselling Service
For debt advice throughout the UK – including Northern Ireland – phone 0800 138 111 or visit the Consumer Credit Counselling Service website.
The OFT has a duty to protect the interests of consumers by ensuring the fitness of those holding or applying for consumer credit licences. The OFT also has a duty to monitor social and commercial developments relating to the provision of credit and related activities.
The OFT is monitoring the lending and broking of secured loans to consumers that have recently gone bankrupt where the purpose of the loan is to annul the bankruptcy.
Background
Where an individual has become bankrupt, the Insolvency Act 1986 allows the individual to apply to court to have the bankruptcy 'annulled' in certain circumstances. One of the ways in which a bankruptcy may be annulled, subject to the discretion of the courts, is where the bankruptcy debts and expenses of the bankruptcy have been paid off.
There is a small but growing market in the UK of lenders and brokers that approach recently bankrupted homeowners offering short-term loans secured on the property in order to annul the bankruptcy before arranging for a remortgage.
A short-term loan is used to repay all outstanding unsecured debts and other costs and an application is made to annul the bankruptcy. Once the bankruptcy is annulled, a remortgage is entered into in order to repay the short-term loan.
Request for information
The OFT is interested to hear about consumers' experiences of such services as part of its ongoing research into this market. We would be particularly interested to hear from consumers who have experienced problems in this area, for example, who may have taken out a short-term loan to finance a bankruptcy annulment, and were then unable to remortgage to pay off the short-term loan.
The OFT would also welcome further information from other interested parties, trade bodies, debt advisers and licensees.
If you have any comments, information of submission that you would like to make to the OFT to assist us in this research, please contact the Secured Lending Team:
Secured Lending Team – 2N18
Fleetbank House
2-6 Salisbury Square
London
EC4Y 8JX
Email: secured.lending@oft.gsi.gov.uk
Responses by 30 October 2009 would be appreciated.
Moe Nawaz – Author – Speaker – Insolvency Auditor - Business Coach
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Filed under: BANKRUPTCY
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