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Bankruptcy is one debt solution for dealing with debts that you cannot repay.
The option of bankruptcy debt management is a debt solution that needs to be considered when an individual cannot pay their debts as they fall due. A person declared bankrupt with debts for the first time will generally receive discharge after one year from the date of the bankruptcy order. In some instances the period of discharge from a bankruptcy can be less than one year.
Unfortunately there is a stigma associated with bankruptcy in UK especially as all bankruptcies are publicly advertised; however it should always be considered when dealing with individual insolvency cases.
If you are facing the prospect of bankruptcy you should look at all the alternatives as soon as possible such as the Individual Voluntary Arrangement (IVA). Contact a qualified debt adviser for immediate advice for your personal circumstances on 0845 055 8152.
The bankruptcy debt proceedings will give you a fresh start (with some restrictions) and eliminate all of your overwhelming debts. The Official Receiver will ensure that your assets are shared out fairly among all your creditors.
Anyone can go bankrupt, including individual members of a partnership. There are different insolvency procedures for dealing with companies and for partnerships themselves.
How are you made bankrupt?
An individual can be made bankrupt either in one of the following ways:
- Voluntarily by the debtor themselves
- Involuntarily by the creditor owed money (£750 Minimum)
- The supervisor or anyone bound by an IVA
A bankruptcy order can still be made even if you refuse to acknowledge the proceedings or refuse to agree to them. You should therefore co-operate fully once the bankruptcy proceedings have begun. If you dispute the creditor’s claim, you should try and reach a settlement before the bankruptcy petition is due to be heard. Trying to do so after the bankruptcy order is made is both difficult and expensive.
What are the implications of bankruptcy?
- You lose control of your assets.
- You cannot obtain credit for over £250 without the permission from the lender.
- You cannot act as a company director.
- You cannot take any part in the promotion, formation or management of a limited company (LTD) without the permission of the court.
- You cannot trade in any business under any other name unless you inform all persons concerned of the bankruptcy.
- You may not practice as a Charted Accountant / Lawyer.
- You may not act as a Justice of the peace (JP).
- You may not become an member of parliament.
- You may not become a member of the local authority.
- Your credit is affected for many years after the annulment.
- You may be publicly examined in court.
What are the advantages of bankruptcy?
For the person involved, bankruptcy provides relative peace of mind and possible automatic discharge after one year (or less in some cases).
For the creditors, bankruptcy allows a full investigation of the debtor's affairs to be carried out.
Bankruptcy is often considered a "last resort" option, but there are other alternatives that can avoid the severe consequences of bankruptcy:
Go to our debt resource pages for detailed information on all debt-related issues
Bankruptcy Information |
