Bankruptcy

Why would you consider this option?

Getting into debt is all too easy these days and when the repayments you face get beyond your ability to pay them the pressure can destroy you, your career and your relationships.

Bankruptcy is usually seen as a last resort for anyone with significant debt problems and the consequences of becoming bankrupt need to be considered carefully but:

  • if your situation is unlikely to improve
  • you have limited assets and
  • cannot afford to repay your debts in a reasonable time

Bankruptcy can offer a positive means of resolving your debt problems and give you an opportunity to make a fresh start. You can apply yourself to be made bankrupt or one of your Creditors may make that decision for you.

It is a complex legal procedure and it’s vital before a petition is issued that you

  • make sure that it is appropriate for you
  • see whether an Individual Voluntary Arrangement is an option
  • do not do anything in relation to your assets or liabilities that could cause you difficulties with the Official Receiver

You can call us for advice and guidance if this is something you are thinking about or if you have been served with a Statutory Demand for a debt you cannot pay – a Bankruptcy Petition normally follows this if the debt is not paid and cannot be disputed.

What happens if I am made bankrupt?

These are just some of the consequences of being made bankrupt

  • you have 21 days to supply details of your finances including a list of your assets and liabilities to the Official Receiver who will then interview you and investigate your financial affairs
  • he will produce a Report for your Creditors to consider after he is satisfied that you have made full disclosure of everything you own that could be realised to help pay off your debts
  • different considerations arise in the case of jointly owner property such as a house – your Creditors can only look to your share but the other owner may face having to buy your share if you both wish to retain the property
  • your bankruptcy is registered against your name for a period of one year unless something untoward is uncovered (one example is your concealing or disposing of assets when you knew you were insolvent). If that happens a Bankruptcy Restriction Order can be made which extends the effects of your bankruptcy for a period determined by a Court up to a maximum of 15 years
  • you cannot apply for more than £500 credit without the authorisation of the Official Receiver
  • any increase in your income or assets during your bankruptcy has to be declared to the Official Receiver who can insist on your paying something to your Creditors from this “windfall”
  • you will almost certainly no longer be able to use any existing bank account or credit card as they will be frozen
  • there are restrictions on certain positions you may want to hold
  • information regarding your bankruptcy will be published in the London Gazette (and possibly elsewhere) and will be recorded online on the Insolvency Service Public Register

As we said the procedure is complex but our Team will assess your situation and advise on the best solution for you in confidence and without obligation.

A useful link is the Bankruptcy Advisory Centre