Bankruptcy |
What is
Bankruptcy? |
| What
is bankruptcy, bankruptcy is an option that often has to
be considered when an individual cannot pay their debts. For a
first time bankruptcy within a 15 year period, for debts under
£20,000, the procedure is known as a Summary Administration
and you may be discharged after two years. A first time
bankrupt with debts over £20,000 may be discharged after three
years. |
|
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 |
 |
| Bankruptcy is
one way of dealing with debts you cannot pay. The bankruptcy
proceedings:- |
- free you from overwhelming debts so you
can make a fresh start, subject to some restrictions
- 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 two or three years.
- For the creditors, bankruptcy allows a
full investigation of the debtor's affairs to be carried
out.
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