Bankruptcy

An individual can be made bankrupt either in one of three ways:

• Voluntarily - by the debtor themselves
• Involuntarily - by the creditor owed money (£750 Minimum)
• The supervisor or anyone bound by an IVA

A bankruptcy order can still be made even if you refuse to acknowledge the proceedings or refuse to agree to them. You should therefore co-operate fully once the bankruptcy proceedings have begun. If you dispute the creditor’s claim, you should try and reach a settlement before the bankruptcy petition is due to be heard (to do so after the bankruptcy order is made is difficult and expensive).

What are the implications of bankruptcy?
• You lose control of your assets
• You cannot obtain credit for over £250 without the permission from the lender
• You cannot act as a company director
• You cannot take any part in the promotion, formation or management of a limited company (LTD) without the permission of the court
• You cannot trade in any business under any other name unless you inform all persons concerned of the bankruptcy
• You may not practice as a Charted Accountant / Lawyer
• You may not act as a Justice of the peace (JP)
• You may not become a member of parliament
• You may not become a member of the local authority
• Your credit is affected for many years after the annulment
• You may be publicly examined in court

What are the advantages of bankruptcy?
• For the person involved, bankruptcy provides relative peace of mind and possible automatic discharge after one year (or less in some cases)
• For the creditors, bankruptcy allows a full investigation of the debtor's affairs to be carried out

Please use the links below for more information about:

• Individual Voluntary Arrangement
• Debt Consolidation

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