What is a Minimum Asset Bankruptcy?

Minimum Asset Bankruptcies are intended for those on low incomes, who have few to no assets.  They also must have debts of less than £25,000 (not including student loans).

The reason why there exists a special type of bankruptcy for people on low income, is such bankruptcies are not likely to return any funds to creditors. 

It is, therefore, designed to be a low-cost form of bankruptcy that is administratively lite. 

It also discharges the consumer after six months, to allow them a fresh start.

Who is eligible to apply for a Minimum Asset Bankruptcy?

• You need to be assessed as not being able to afford any payments to your bankruptcy; or
• You must be shown to have been solely in receipt of an income-based benefit for at least 6 months, ending with the day on which your application is made.
• There is no minimum amount of debt required;
• You must not have debts of more than £25,000, at the date of your application (when calculating the £25,000, don’t include student loans);
• Your assets in full cannot be worth more than £2,000; and
• No single asset can be worth more than £1,000;
• You cannot own any land (including a home);
• You must have a certificate of sequestration granted within 30 days of making your application;
• You must also have received money advice by an approved money adviser or licenced insolvency practitioner;
• You cannot have an award of sequestration made against you using the Minimum Asset Procedure within 10 years of your application, ending on the day before the date of your application; and
• You cannot have an award of sequestration (Full Administration Bankruptcy) made against you within 5 years of your application, ending on the day before your application.

What are the consequences of a Minimum Asset Bankruptcy?

The consequences of using this type of bankruptcy are the same as any other type of bankruptcy, in that it will:

• Be noted on your credit reference file for six years;
• It will restrict how much you can borrow, without notifying the person you are borrowing from that you are or have been bankrupt;
• All your assets will vest with your trustee (although you should not have any in a MAP). This also includes any assets you may acquire that would vest with the Trustee (inheritances, windfalls etc.) within 4 years of your MAP being awarded;
• You will receive a discharge from your eligible debts at the end of the six months.

How much does a MAP cost?

A Minimum Asset Bankruptcy is free to apply for, as to do so, you have to show you cannot afford to pay anything towards your bankruptcy.

When do I get out of my bankruptcy?

You will receive a discharge from your bankruptcy after 6 months, but you will still be bound by certain restrictions for another 6 months, even after your discharge.  These are:

• You must not operate a business, other than under your own name (you cannot use a trading name). Where you do use a trading name you must inform the person you are trading with of your own name.
• You cannot borrow, more than £2,000 without informing the person you are borrowing from that you were previously in a Minimum Asset Bankruptcy; or any amount, where you already owe £1,000.

What happens if my situation changes during my MAP?

If your situation changes during your Minimum Asset Bankruptcy and before you receive your discharge, and it is found you can afford pay something to your bankruptcy, your MAP will be converted into a Full Administration Bankruptcy.

This may mean you will not receive a discharge and may have to pay a contribution, if you can, for up to 48 months.

How do you apply for a MAP?

You apply for a Minimum Asset Bankruptcy by seeking advice from a Licenced Insolvency Practitioner or approved Money Adviser. You will find an Approved Money Adviser by contacting your local Citizen Advice Bureau or Local Authority Money Advice Service.