Suitable for: Individuals
Any creditor owed more than £5,000 can obtain a bankruptcy order, or as the debtor, you can petition for your own bankruptcy. The Official Receiver will either deal with your assets or appoint an Insolvency Practitioner to act as trustee to deal with your assets instead.
Typically, your assets will be sold and the funds will be used to pay your creditors. Any income surplus to the needs of yourself and your dependents will be utilised as contributions to your creditors for up to 3 years. This will be instructed by the issuing of an Income Payments Order.
In most cases, discharge from bankruptcy occurs after 1 year. This is on the condition that there have been no criminal offences or restriction orders made. Creditors will not be able to pursue the debtor for repayment.
– The majority of debt is written off and you gain a degree of freedom
– A ‘non-culpable’ first time bankrupt will be discharged within 12 months and freed from the restrictions
– You may be directed to pay a proportion of surplus income to your creditors
– Basic possessions and the tools of your trade are not re-possessed
– If you do not have any assets, bankruptcy might be a better option than an Individual Voluntary Arrangement
– Your assets will be seized and sold to pay creditors
– Some debts, such as student loans, child support and overpayment of benefits and court fines, are not written off
– Your bankruptcy will be advertised in the London Gazette, and your employment contract could be affected
– You will be questioned about the circumstances of you declaring bankruptcy
– You must disclose your bankruptcy status should you wish to obtain credit over £500
– During your period of bankruptcy, you will be prevented from being a company director or running a limited company
Bankruptcy might not be the best solution for your financial difficulties. Another option to resolve your debts could be a Debt Relief Order, this option is cheaper and, therefore, could be a better alternative if you have income and property below a certain amount.