Bankruptcy

Bankruptcy is an option that would only be considered if there was no other way of paying your debts as they fall due.

Historically, people have tried to avoid bankruptcy due to the stigma attached to it. Bankruptcy was thought to be something irresponsible people did or had done to them but that is far from the truth and the stigma is much less severe today. Bankruptcy today has become a logical, legal and beneficial tool for many people to use to remedy a difficult and problematic bad debt situation.

bankruptcyA first time bankrupt with debts will generally receive a discharge one year after the date of the bankruptcy order (there is the possibility that in some cases the bankruptcy discharge period will be less than one year).

The bankruptcy proceedings will free you from overwhelming debts so you can make a fresh start, subject to some restrictions. Anyone can go bankrupt, including individual members of a partnership. There are different insolvency procedures for dealing with companies and for partnerships themselves.

There are three basic ways that an individual is bankrupted:

  1. voluntarily where the bankruptcy is initiated by the debtor themselves;
  2. involuntarily and implemented by the creditor who is owed money (£750 Minimum); and
  3. the supervisor or anyone bound by an Individual Voluntary Arrangement
Advantages
 Disadvantages
  • Bankruptcy provides relative peace of mind and possible automatic
  • discharge after one year (or less in some cases).
  • You restart, at the end of the bankruptcy period, with a clean slate.
  • You will pay less with a bankruptcy than an IVA
  • You will lose control of all assets.
  • You cannot obtain credit for over £500.
  • You cannot act as a company director or form or manage a company.
  • Your credit is affected for many years after the annulment.
  • You may be publicly examined in court.
  • Your bankruptcy is published
  • Bankruptcy allows a full investigation of your affairs to be carried out.
  • You may be required to make payments into a bankruptcy fund

If there is no alternative but to be made bankrupt we will arrange an insolvency practitioner. Invariably an insolvency practitioner can be appointed as trustee instead of the Official Receiver. The practitioner is then responsible for disposing of your assets and making payments to your creditors but will help you with the administrative details of bankruptcy.

What does it cost?

Court Fee of £120
In some circumstances the Court may waive this fee; for example, if you are on Income Support. If you are not sure whether you qualify for a reduction in the fee, or if you are exempt from paying the fee, Court staff will be able to advise you.

Deposit of £250
Towards the costs of administering your bankruptcy. This deposit is payable in all cases.

Fee to Swear the Statement of Affairs
In a County Court, no charge is made to swear the affidavit, which is part of your statement of affairs. But in the High Court or before a solicitor there is a £7 charge.

Payment is required in cash.