Bankruptcy

• How do I apply for bankruptcy?
• Can I be made bankrupt?
• How do I know if I have been made bankrupt?
• What effects will bankruptcy have?
• How long will bankruptcy last?
• Are there any other options other than bankruptcy?

How do I apply for bankruptcy?
You will need to complete a bankruptcy petition at your local county court. This is known as Voluntary Bankruptcy and you will have to pay £485, £150 of this is court fees which you may be able to get waived if you are on a low income or unemployed.

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Can I be made bankrupt?
Any creditor that you owe £750 or more to can make you bankrupt, this is known as Involuntary Bankruptcy.

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How do I know if I have been made bankrupt?
You will have received a statutory demand from a creditors solicitor, this gives you 21 days to settle the debt. If the debt is not settled your creditor or a solicitor acting on their behalf may start bankruptcy proceedings. To avoid bankruptcy you must apply to have the statutory demand set aside. To successfully have the statutory demand set aside one or more of the following must be satisfied;

• The amount stated on the statutory demand is disputed.
• The person issuing the statutory demand also owes money. This is called a counterclaim.
• The person issuing the statutory demand is holding security that equals or exceeds the amount owing.
• The demand was issued in error.
• The amount owing is less than £750
• Execution has been stayed on a judgement debt.
• The debtor is complying with an instalment order. This would mean the debt is not actually owed as it is being paid back.
• The creditor failed to comply with the rules and prejudiced the debtor in the process.

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What effects will bankruptcy have?
If you are a professionally qualified person such as a solicitor or accountant your practising certificate may be suspended. You cannot act as a company director whilst bankrupt. Other employment may also be affected.

Your assets will be sold to pay off some or all of your debts; this could include your home and car. Your bankruptcy will be advertised in local newspapers.

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How long will bankruptcy last?
In most cases bankruptcy ends after one year, or even sooner if the Official Receiver decides to close the file early. The slate is then wiped clean and your creditors can make no further claims against you. This is known as discharge. There are some exceptions. For example, you may still have to pay any lump sum order made against you in divorce proceedings, any amount you owe under student loan and any unpaid court fines. Even if some of your assets remain unsold after the end of your bankruptcy, they will still remain available to your creditors and your trustee can still sell them. The bankruptcy will also remain on record with credit reference agencies and the Land Registry.

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Are there any other options other than bankruptcy?
There are debt solutions available that have less serious consequences like an IVA or Debt Management Plan. Our advisors will be happy to discuss all options available.

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