What is Full Administration Bankruptcy
Full Administration Bankruptcy (FAB) is for clients that do not qualify for the Minimal Asset Process (MAP) bankrutpcy. FAB is a useful option for clients who cannot afford to repay their debts in a reasonable time, or not at all, and they have few or no assets or no chance of coming into any in the next four to five years.
When a client wishes to apply for bankruptcy, the debt adviser decides whether to apply for FAB or MAP. The Account in Bankruptcy (AiB) checks when the application is submitted to ensure all information and evidence has been provided and the application meets the specific criteria.
Creditor petitions (see here) also fall within the FAB process. Some advantages of FAB bankruptcy
Bankruptcy allows a client to write off up to 100 per cent of their qualifying debt while a trustee deals with creditors.
Creditors cannot take legal action against the client to recover their debt. This includes interest, fees and charges which are frozen.
Creditors can only claim for the outstanding balance due as at the date of sequestration.
It also stops or removes the effect of any existing diligence (such as wage arrestment, bank arrestment and deduction of earnings order) and prevents the instigation of new diligence by the client’s creditors.
The debtor is discharged of their liability when their discharge is granted. The debtor’s discharge will be considered at 12 months and may be granted, but it is dependent on their co-operation.
Some disadvantages of FAB bankruptcy
Clients may find their employment prospects harmed.
They cannot act as a director of a limited company or be involved in the financial management of a limited company.
They cannot act as an MP or a Justice of the Peace.
The client’s credit rating will be adversely affected for six years.
They may be in breach of contractual obligations by being made bankrupt such as tenancy, car lease agreements and employment contracts These have to be checked before recommending bankruptcy to a client.
Service providers (eg, gas or electricity suppliers) may have concerns over how they provide a service to a client. They may change how they want to receive payments from the client by using a prepayment card or meter.
Banks may freeze or close accounts after a client is declared bankrupt.
Bankruptcy is recorded on the Register of Insolvencies for at least one year after discharge. It is a public register which is available for everyone to search. Data retention information can be found at .