Bankruptcy

Process

You can apply for bankruptcy yourself or it can be done by your creditor, if you owe over £5,000 to them. You are able to make yourself bankrupt online.

You can be made bankrupt by a creditor if you:

• Owe £5,000 or more;

• Break the terms of an Individual Voluntary Arrangement (IVA); or

• Falsify information on your application for an IVA.

The usual process is for a creditor to issue a Statutory Demand before issuing proceedings. Once the demand has expired, a petition can be issued and a hearing date scheduled. The Court will then determine whether or not the individual should be made bankrupt, and whether the correct process has been followed.

Once a petition is accepted and bankruptcy order has been made, the debtor will then be bankrupt, in most cases for a year. The Official Receiver or an Insolvency Practitioner will then be appointed as your Trustee and will manage the process by taking control of your assets.

Positives

• Most debts can be included within the bankruptcy

• You are afforded protection from creditors

• It allows you to keep essential goods for living and trade

• Can give you a fresh start

• Managed by the Official Receiver or an Insolvency Practitioner reducing the stress on you

Negatives

• It will be difficult to obtain credit, as the bankruptcy will be on your credit file for six years

• Your assets may have to be sold

• Various contracts, including tenancy agreements, may be cancelled

• It may make obtaining certain types of employment impossible

• If your income is high enough, you may have to make payments into your bankruptcy for up to 3 years

• It can affect your business as you are not able to be a company director without the Court’s permission

If you are looking for more information or guidance in respect of bankruptcy please get in touch as soon as possible. This is not an option recommended for everyone and it is best to seek the guidance of a legal / insolvency professional to ensure you are fully advised of your options moving forward.