Bankruptcy

For most people, bankruptcy sounds like a complete disaster, and it certainly requires careful thought and specialist advice. However, bankruptcy can enable you to make a fresh start by writing off all your unsecured debts.

An individual or one of their creditors can petition for an individual’s bankruptcy.  An individual can do this online without Court involvement.  A creditor must issue a bankruptcy petition and a hearing will be set down.  If the petition is not defended, a Bankruptcy Order will be made against the individual and the Official Receiver will be appointed Trustee in Bankruptcy who has a duty to

• Consider whether it is appropriate to appoint an independent Insolvency Practitioner as Trustee in Bankruptcy
• Protect and realise the individual’s assets
• Make repayment to creditors should funds allow
• Undertake an investigation as to the circumstances surrounding the individual’s financial position

All assets, with the exception of those required for domestic needs or work purposes, will vest in the Trustee in Bankruptcy and the individual will lose control over the disposal of these assets.  A Trustee in Bankruptcy may also seek a contribution towards the individual’s liabilities by way of an Income Payments Agreement or Income Payments Order which can last up to three years.

Whilst an individual will generally obtain his discharge from bankruptcy within 12 months, he will be subject to a number of restrictions for that period:

• Inability to obtain credit without disclosing their bankrupt status
• Cannot be a director of a limited company without permission of the Court
• May not be able to continue trading in professional services, eg accountant, solicitor and financial advisor