Bankruptcy - Birmingham Solicitors Personal Injury Solicitor

Insolvency - Bankruptcy

Bankruptcy is a distressing situation to confront, and can have a number of unwelcome implications. That is why you need as much information as possible before you take any action, allowing you to face bankruptcy with full knowledge of the process involved.

Applying For Bankruptcy

There are two ways you can be made bankrupt:

1. Voluntary Petition
If you find yourself in a position where you can no longer pay your debts, you can apply to the court for a bankruptcy order yourself.

2. Creditor’s Petition
Alternatively, if you owe someone £750 or more, they may make a Creditor’s Petition to the court asking for a bankruptcy order to be taken out against you.

In each case, a petition must be made to the bankruptcy court. Here you will have to attend an interview and provide the required fees (usually a minimum of £450). It will also be necessary to hand over the necessary paperwork, including a Debtor’s Bankruptcy Petition (which states the reasons for your bankruptcy) and a Statement of Affairs (detailing a list of your assets).

A Bankruptcy Order Has Been Issued – What Happens Next?

As soon as a court issues a bankruptcy order, you automatically have certain restrictions imposed upon you. These include:-

Borrowing more than £500 with telling a lender you are bankrupt;
Acting as director of a company;
Creating, managing or promoting a company with the court’s permission;
Working as an insolvency practitioner;
Managing a business without telling those you are doing business with that you are bankrupt.

Along with abiding to these restrictions, you must also co-operate with your Trustee. This will be someone appointed by the court, and will either be an Official Receiver or (if you have significant assets) an Insolvency Practitioner. They will be given total control of your assets, using them to pay back your creditors. You must not deal with your creditors personally – instead, all applications for the payment of debts must be made directly to your Trustee.

This arrangement usually lasts for around 12 months, after which most people are ‘discharged’ from debt. However, this may be delayed if there is a failure to co-operate with a Trustee, or if any of the restrictions have been broken. Furthermore, some people are subject to a Bankruptcy Restriction Order, which can impose the restrictions of bankruptcy (detailed above) for up to 15 years. These are usually taken out against those whose financial trouble was caused by either careless or dishonest behaviour.

Seek Professional Advice

If you are facing financial difficulties, you need to know what your options are. A legal expert will be able to provide all the information you need before you take action, explaining the process of bankruptcy, going through the implications, and exploring potential alternatives.