What is Bankruptcy?

Introduction

Bankruptcy is an option that often has to be considered when an individual cannot pay their debts as they fall due. A first time bankrupt with debts will generally receive their 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). Although bankruptcy has a bad stigma and is publicly advertised, it should always be considered when dealing with individual insolvency cases.
Please note that if your are ever faced with the prospect of bankruptcy you should look at alternatives as soon as possible such as the
Individual Voluntary Arrangement procedure (IVA).

Bankruptcy is one way of dealing with debts you cannot pay.

The bankruptcy proceedings:- 

1. free you from overwhelming debts so you can make a fresh start, subject to some restrictions
2. make sure your assets are shared out fairly among your creditors.

Anyone can go bankrupt, including individual members of a partnership. There are different insolvency procedures for dealing with companies and for partnerships themselves.

How are you made bankrupt?

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. Trying to do so after the bankruptcy order is made is both 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 an 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.

What is bankruptcy? | Bankruptcy explained | The bankruptcy process | The effects of bankruptcy | The disadvantages of bankruptcy | How do I petition for my own bankruptcy? | What happens after bankruptcy? | What are the alternatives to bankruptcy?| Can my bankruptcy be reversed? | Can my bankruptcy be cancelled? | New legislation - the Enterprise Act 2002? | Frequently asked questions | Bankruptcy additional facts | UK Personal Bankuptcy | Bankruptcy Records | Bankruptcy Advice | What happens when you visit the Official Receiver's Office? | What happens to my home in bankruptcy? | What happens to my pension in bankruptcy? | When will my bankruptcy end? | How am I made Bankrupt? | Where is the Bankruptcy Order made? | Who will deal with my bankruptcy? | Who do I need to tell if I go bankrupt? | What are your duties as a bankrupt? | What effect will Bankruptcy have on your credit rating? | Payment to your creditors in Bankruptcy | What happens to your assets in bankruptcy? | What is a bankruptcy restriction notice? | What is a form J restriction? | What happens in bankruptcy if I rent my house? | What happens to your life assurance policy in bankruptcy? | What happens to your business in bankruptcy? | What happens to your wages in bankruptcy? | What are bankruptcy restrictions orders and undertaking? | Debts you have incurred after you have been made Bankrupt | What are the advantages of going Bankrupt? | What are the disadvantages of going Bankrupt? | What are the implications of  Bankruptcy? | Jersey - a guide to Bankruptcy Law | Bankruptcy Law | Student Loans and Bankruptcy | Bankruptcy Forms | Avoid Bankruptcy | Business Bankruptcy | Accountant in Bankruptcy | Bankruptcy Lawyers | Bankruptcy Search | Bankruptcy in the UK | Declaring Bankruptcy | Filing for Bankruptcy | How to go Bankrupt | Insolvency Practitioners | Voluntary Bankruptcy | How do I avoid Bankruptcy? | Consequences of Bankruptcy | Borrowing after Bankruptcy | Bankruptcy and Student Loans | Annulling the Bankruptcy | Bankruptcy - The Court | Bankruptcy Bank Accounts | Debt Resolution Forum | Mortgage after Bankruptcy | Personal Bankuptcy | Bankruptcy Mispellings