Bankruptcy Advice
Bankruptcy is a formal insolvency route for individuals with
serious debts that they cannot pay. Bankruptcy is often the last
resort and is usually applied when no meaningful alternative can be
offered to creditors.
You may petition for your own bankruptcy or a bankruptcy order
may be applied for by one of your creditors if you cannot pay what
is owed to them. Whilst the Enterprise Act 2002 allows some
bankruptcies to be discharged after one year, any proof of reckless
spending may result in a bankruptcy period of between 2 and 15
years.
Is
bankruptcy an option for me? »
Becoming bankrupt:
A court makes a bankruptcy order only after a bankruptcy
petition has been presented either by:
- the debtor themselves (debtor's petition); or
- by one or more unsecured creditors who are owed at least £750
(creditor's petition).
- a supervisor of an individual voluntary arrangement may also
present a petition if they believe they have grounds.
A bankruptcy order can still be made, even if the debtor refuses
to acknowledge the proceedings or refuses to agree to them.
Once the bankruptcy order has been made the process involved is
the same whoever issued the petition.
Issuing a petition for your own bankruptcy?
To petition for your own bankruptcy you must be able to show
that you are unable to pay your debts.
However before making any decision about making yourself
bankrupt it is essential that you seek independent advice. For this
you may approach an insolvency practitioner or one of many free
debt advice providers such as your local Citizens Advice Bureau. If
you have carefully considered your circumstances and still wish to
proceed, you should contact your local County Court (or the High
Court if you live in London).
The staff at your local County Court are happy to help people
complete the paperwork needed to present a bankruptcy petition. You
will be required to make a statement of your income and your
average monthly expenditure so you should ensure that you have
prepared this in advance of attending the court.
The court will also require information about all the people to
whom you owe money (your creditors). You should include their full
name or trading name, their address, the amount you believe you owe
or the amount they have demanded from you if this is different, and
any reference numbers that may be relevant.
You will be charged £140 in court fees (unless there are
exceptional circumstances) and a further £310 for the
administration of your bankruptcy.
The court may hear your petition may on the same day that you
present it, or it may arrange a later date when it will be
considered.
How a bankruptcy petition may be made against you
If one or more of your creditors are owed £750 or more they may
issue a bankruptcy petition against you.
Usually a formal demand for payment will be made by your
creditors prior to issuing a bankruptcy petition. This may take the
form of a final written demand or a statutory demand. If a
statutory demand is made you must respond within 18 days. Once 21
days has elapsed from the date of the statutory demand being issued
the creditor may issue a petition without additional warning.
What happens once a bankruptcy order is made?
Usually the Official Receiver will deal with your affairs once a
bankruptcy order has been made against you.
Within 21 days, you must provide the Official Receiver with all
information they require regarding your financial affairs -
including a list of all of your assets and the amount and details
of all your debts.
Usually, but not always, you will be required to attend the
office of the Official Receiver soon after the bankruptcy order has
been made.
The Official Receiver is a civil servant who is required to
investigate the financial affairs of all individuals who are made
bankrupt.
A licensed insolvency practitioner may be appointed trustee in
place of the Official Receiver. Like the Official Receiver, they
are required to deal with the disposal of your assets and the
making of payments to creditors.
Is
bankruptcy an option for me? »
